Bandhan Bank Q1 FY26 PAT at ₹372 Crore Amidst EEB Challenges; Deposits Grow 16% YoY
The announcement provides a comprehensive overview of the bank's Q1 FY26 financial results, including detailed performance metrics, asset quality, strategic initiatives, and management outlook. This information is crucial for investors to assess the bank's current health and future prospects, especially concerning the ongoing challenges in the EEB portfolio and diversification efforts.
The sentiment is neutral as the announcement presents a mixed financial performance. While there are challenges in the EEB segment leading to a sequential decline in advances and YoY PAT reduction, the bank shows strong growth in total and retail deposits, significant diversification towards a secured non-EEB portfolio, improved credit costs sequentially, and robust operational initiatives. The management also expresses cautious optimism for EEB recovery.
Bandhan Bank Limited has released the transcript of its earnings call for the first quarter (Q1) ended June 30, 2025. The bank reported a Net Profit After Tax (PAT) of ₹372 crore for Q1 FY26.
Key highlights from the performance and management commentary include: * The Reserve Bank of India (RBI) projects a real GDP growth rate of 6.5% for FY2025-26 and moderate CPI inflation of 3.7%. RBI has implemented a 100 basis point reduction in repo rate since early February 2025 and announced a phased reduction in CRR by 100 basis points. * Gross advances stood at ₹1.34 lakh crore as of June 30, 2025, a year-on-year (YoY) growth of 6% but a sequential decline of 2.5% due to a 7% contraction in the Emerging Entrepreneurs Business (EEB) portfolio. * The EEB portfolio declined by 15% YoY to ₹52,812 crore due to strategic controls implemented in response to elevated sectoral risks. * The non-EEB portfolio, accounting for nearly 60% of total advances, registered a robust growth of 27% YoY, driven by retail assets (+78% YoY), wholesale banking (+32% YoY), and housing (+15% YoY). * The secured book grew by 29% YoY, now constituting 52% of total advances, up from 43% a year ago. * Total deposits reached ₹1.55 lakh crore, reflecting a healthy 16% YoY growth, outpacing advances growth. Retail term deposits grew by a strong 34% YoY. CASA deposits accounted for 27% of total deposits, showing a 12% quarter-on-quarter (QoQ) decline due to typical Q1 seasonality and reduction in savings interest rates. * Net Total Income stood at ₹3,483 crore, a YoY decline of 1%. Operating profit was ₹1,668 crore, a 6% sequential increase. * Net Interest Margin (NIM) for the quarter was 6.4%, down from 6.7% in Q4 FY25. Annualized Return on Assets (ROA) was 0.8%, and Return on Equity (ROE) was 6%. * Gross NPA stood at 5.0% and Net NPA at 1.4%. Provision Coverage Ratio (including technical write-offs) improved to 87.3%. Gross slippages declined to ₹1,553 crore (from ₹1,748 crore last quarter), with EEB slippages moderating to ₹1,089 crore. Technical write-offs amounted to ₹1,047 crore, with ₹952 crore in the EEB portfolio. * Credit costs improved sequentially to 3.5% of advances from 3.9% in the previous quarter. * The increase in SMA-0 for the EEB portfolio (to ₹2,026 crore) was attributed to a procedural change in raising installment demands on holidays, particularly impacting West Bengal and Assam. Management stated this is recoverable and not a major concern. NPA increase in retail and housing portfolios was attributed to old, unsecured books and specific geographies. * Management anticipates challenges in the EEB segment to persist until Q2 FY26, with gradual recovery expected in the second half of the fiscal year. * The bank enabled all 4,400 banking units to offer retail term deposits, with over 2,000 units activated, generating nearly ₹4,200 crore in incremental retail term deposits through the "Grow Deposit, Grow Together" campaign. * Pioneered the use of WhatsApp and Rich Communication Services channels for recovery efforts, yielding 80% recovery in pilot. Expanded government and financial services, including tax collections, pension disbursements, and MoUs with various government entities. * Wholesale banking segment closed its first debt syndication mandate and increased non-fund trade book to ₹2,100 crore. * The bank is strategically diversifying its portfolio towards secured retail lending segments. The "Bandhan Plus 3" portfolio is expected to reduce to sub 2%-3% over the next 2-3 quarters as no new onboarding is done in this category.
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