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    Bandhan Bank

    BANDHANBNK
    Financial Services·5 May 2026
    Management Summary

    Bandhan Bank reported a strong Q4 FY26, marked by robust growth in advances (13% YoY) and deposits (10% YoY), alongside significant improvements in asset quality with gross slippages declining to INR 1,028 crores. Profitability saw a notable uplift, with NIMs expanding to 6.2% and net profit soaring 68% YoY to INR 534 crores, supported by a healthy capital adequacy of 18.0%. The bank is strategically focused on enhancing its liability franchise, optimizing costs, and achieving its ambitious ROA and credit cost targets for FY27, despite facing some non-recurring expenses and external uncertainties.

    Highlights

    7

    • Gross advances grew 13% YoY to INR 1.54 lakh crores, reflecting strengthening fundamentals across core businesses.

    • Total deposits increased 10% YoY to INR 1.66 lakh crores, with retail term deposits growing 30% YoY, reinforcing the stability of the deposit base.

    • CASA ratio improved by nearly 200 bps QoQ to 29.3%, driven by strong sequential growth in current accounts.

    • Net Interest Margins (NIMs) expanded sequentially to 6.2% as funding costs softened and advances yields improved.

    • Net profit for Q4 FY26 grew 68% YoY to INR 534 crores, demonstrating improved operating efficiency and underlying profitability.

    • Capital Adequacy Ratio (CAR) stood robust at 18.0%, with Tier 1 at 17.3%, providing ample headroom for future growth.

    • Collection efficiency (ex-NPA) improved to 98.9% in March 2026, and gross slippages declined sharply to INR 1,028 crores in Q4, indicating better portfolio behavior.

    Concerns

    3

    • Operating expenses were elevated in Q4 due to non-recurring items, totaling approximately INR 120 crores (INR 60 crores from PSLC costs and INR 50 crores from IT expenses).

    • Management noted intense deposit competition, with deposit rates going up significantly in March due to competitor offerings.

    • Uncertainty regarding the potential impact of the Middle East war on the economy, fuel prices, and credit costs.

    Key financials

    Metrics

    14

    Periods

    2

    Headline

    11
    • Gross Advances
      ₹1.54L Cr
      YoY+13%QoQ+6%
    • Total Deposits
      ₹1.66L Cr
      YoY+10%QoQ+6%
    • CASA Ratio
      29.3%
    • NIM
      6.2%
    • Net Profit (PAT)
      ₹534 Cr
      YoY+68%QoQ+1.6%

    Q4

    3
    • Credit Cost
      2%
    • RoA
      1.1%
    • RoE
      9%

    Segment breakdown

    EEB Portfolio
    ₹53,906 Cr Value23% Share of Advances
    Non-EEB Segments
    25% YoY Growth
    Secured Book
    25% YoY Growth56.0% Share of Overall Portfolio
    Small Business and Agri Loans
    12% Share of Advances
    Wholesale Banking
    31% Share of Advances
    Housing
    23% Share of Advances
    Retail Loans
    11% Share of Advances
    Vehicle Loans
    ₹5,000 Cr Book Size₹3,000 Cr Commercial Vehicles₹1,700 Cr Construction Equipment₹1,800 Cr Car Loans₹900 Cr 2-Wheelers Loans
    List

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Dividend

    ₹1.5/share (final)

    Liquidity

    Liquidity disclosed

    Period end LCR was around 131%, with average LCR ranging from 130% to 140%. This is supported by a large portion of retail deposits and reduced dependence on bulk deposits.

    Guidance & targets

    8
    CategoryTargetPriority
    Profitability
    RoA
    1.6%-1.7%
    		High
    Other
    PSL Cost
    down by almost 50%
    		High
    Other
    PSL Cost
    neutralized or zero
    		Medium
    Other
    Secured Mix
    58%
    		High
    Other
    Overall NIM plus other income on assets
    7.5%
    		Medium
    Credit Growth
    Credit Growth
    14%-15%
    		High
    Margin
    NIM
    10 to 20 basis points improvement
    		High
    Credit Cost
    Credit Cost
    1.6%-1.7%
    		High

    RoA Trajectory

    by the exit of FY27
    Current1.1% (Q4 FY26)
    Target1.6%-1.7%

    Why it matters

    RoA is a key profitability metric, and management has set a clear target for its improvement.

    And going forward⏳, as we have been guiding the market, we will be working towards seeing how we can gradually keep on improving the ROA towards the guided level of between 1.6% to 1.7% ROA by the exit of FY27, give or take 10 basis points.

    How to verify

    key_financials.metrics[label='RoA']

    Risks & concerns

    3
    RiskSeverity

    External Geopolitical Events

    Uncertainty regarding the impact of the Middle East war on the economy, fuel prices, and cascading effects on other sectors, which could affect credit costs. — Management acknowledged

    medium

    Deposit Competition

    Intense competition in the deposit market, with other banks offering significantly higher rates, could pressure the bank's cost of funds. — Management acknowledged

    medium

    Non-recurring Operating Expenses

    Operating expenses were elevated in Q4 FY26 due to approximately INR 120 crores in non-recurring items, including PSLC costs and IT expenditures, though these are not expected to repeat immediately. — Management acknowledged

    low

    Q&A highlights

    8

    “So, what we have done is that we have revamped our entire credit process in our EEB segment to quality more portfolio in the PSL and also incremental focus on our direct agriculture loans. The effect of these is going to come, as in this year, we are expecting that the PSL cost would come down by almost 50% to what we have incurred in FY26. That is our aim this year. Going forward, next year, it will be almost neutralized or coming to zero.”

    Management provided a clear strategy and numerical target for reducing a significant cost item, indicating future profitability improvement.

    asked by Piran Engineer

    3 min read7 chapters

    Detailed Narrative

    01

    Q4 FY26 Performance Overview

    Bandhan Bank delivered a strong Q4 FY26, with gross advances reaching INR 1.54 lakh crores, marking a 13% YoY growth, and total deposits scaling to INR 1.66 lakh crores, up 10% YoY. The bank reported a net profit of INR 534 crores for the quarter, reflecting a significant 68% YoY increase. This performance was underpinned by strengthening fundamentals across core businesses and disciplined execution, with operating profit standing at INR 1,441 crores.

    02

    Asset Quality and Collection Efficiency Improvements

    Asset quality trends were constructive, with gross slippages declining sharply to INR 1,028 crores in Q4, down from INR 1,314 crores in the previous quarter. Overall collection efficiency (excluding NPA) improved to 98.9% in March 2026, up from 98.1% in December 2025. The EEB segment also saw a meaningful reduction in slippages and improved early delinquency indicators, with the 0-90 DPD pool declining to about 3.1% of advances.

    03

    Liability Franchise Strengthening and CASA Growth

    The bank made significant progress in improving the quality and granularity of its deposits, with CASA growth being strong and the CASA ratio improving by nearly 200 bps QoQ to 29.3%. Retail term deposits showed robust traction, growing 30% YoY, contributing to an overall retail deposit composition of 74%. This strategy involved consciously reducing the share of high-cost bulk deposits, which now account for 26% of total deposits, down from 31% last year.

    04

    Profitability and Capital Position

    Margins showed an encouraging upward trend, with NIMs improving sequentially to 6.2% due to softened funding costs and improved advances yields. The bank's capital position remains robust, with a Capital Adequacy Ratio of 18.0% and Tier 1 capital at 17.3%, providing ample headroom for future growth. The RoA for Q4 stood at 1.1% and RoE at 9%, reflecting improved operating efficiency.

    05

    Strategic Priorities and Outlook

    Management reiterated its focus on sustainable, profitable growth, aiming for an ROA of 1.6%-1.7% and credit costs of 1.6%-1.7% by the exit of FY27. Key priorities include deepening customer engagement, enhancing digital journeys, and strengthening the liability franchise. The bank also aims for 14%-15% credit growth and a secured book mix of 58% by March 2027, with an overall NIM plus other income target of 7.5% on assets.

    06

    PSL Management and Costs

    The bank is actively revamping its processes to improve the quality of its PSL portfolio, particularly within the EEB segment and direct agriculture loans. Management expects PSL costs to decrease by almost 50% in FY27, with an aim to neutralize or bring them to zero in the subsequent year, significantly impacting profitability. This quarter, PSLC costs contributed approximately INR 60 crores to non-recurring📎 operating expenses.

    07

    ECL Transition Impact

    Regarding the RBI's ECL guidelines, the bank estimates a transition impact of approximately INR 1,250 crores based on the December 2025 portfolio. This translates to an annual impact of INR 250 crores over five years, which can be absorbed through retained earnings or capital. This is expected to result in an estimated 16-17 basis points impact on CRAR annually, though the bank's current provisioning for EEB is already higher than the new requirements.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.