Bandhan Bank Reports Q2 FY26 Net Profit of ₹112 Crore, Navigates Transitional Phase
Bandhan Bank reported Q2 FY26 net profit of ₹112 crore, significantly down. Performance was below expectations due to repo rate impact and EEB stress. The bank focuses on diversification and expects improved growth and profitability from Q3 onwards.
The announcement provides detailed financial results for Q2 FY26, showing a substantial decline in net profit and ongoing challenges in the core EEB segment. The management's forward-looking statements on strategic realignment, expected improvements in NIM and credit costs, and diversification efforts are crucial for investor assessment of the company's future trajectory.
The bank reported a significant drop in Q2 FY26 net profit to ₹112 crore, falling short of internal expectations due to the repo rate cut, MCLR reduction, and elevated stress in the EEB segment. However, the management highlighted strong growth in the non-EEB portfolio, improved secured asset mix, sequential CASA growth, robust capital, and strategic initiatives aimed at long-term sustainable growth and improved profitability from Q3 onwards.
Bandhan Bank Limited released the transcript of its earnings call for the second quarter (Q2) and half-year ended September 30, 2025. The bank reported a net profit of ₹112 crore for Q2 FY26, a significant drop from ₹937 crore in Q2 FY25 and ₹372 crore in Q1 FY26.
Key highlights from the Q2 FY26 performance include: * Gross advances grew 7% year-on-year (YoY) to ₹1.40 lakh crores. * Total deposits increased 11% YoY to ₹1.58 lakh crores, outpacing advances growth. * Retail term deposits showed strong momentum with 38% YoY growth, bringing overall retail deposits (CASA and retail term) to 71% of total deposits, up from 68% in the previous quarter. * Net Interest Margin (NIM) stood at 5.8% for Q2 FY26 and 6.1% for H1 FY26, reflecting pressures from repo rate moderation and a 200 basis points reduction in MCLR. * Gross NPA and Net NPA ratios remained stable quarter-on-quarter (QoQ) at 5% and 1.4% respectively. * Credit costs marginally improved to 3.4% for Q2 FY26. * The bank undertook technical write-offs amounting to ₹865 crore during the quarter. * Capital Adequacy Ratio remained robust at 18.6%, with Tier I capital at 17.8%.
Management acknowledged that Q2 FY26 performance was below internal expectations due to: * The impact of the 75 basis points repo rate cut and MCLR reduction on interest income. * Elevated slippages in the Emerging Entrepreneur Business (EEB) segment, which are anticipated to continue for another 1-2 months. * Subdued growth in the EEB portfolio. * Advances growth largely occurring at the end of the quarter, contributing minimally to Q2 profit and loss.
Despite challenges, the bank highlighted encouraging developments and strategic initiatives: * Strong 24% YoY growth in the non-EEB book, which now accounts for nearly 63% of total advances. * The secured loan book grew 25% YoY, improving its mix to 55% of total advances. * Renewed momentum in CASA, registering a 5.6% sequential growth. * Sequential decline in SMA-1 and SMA-2 balances within the EEB segment, signaling early signs of asset quality improvement. * Initiatives to strengthen its granular liability franchise, including the "Grow CASA, Grow Together" campaign and specialized products for HNI individuals. * Enhanced digital capabilities and government partnerships, such as integration with CBIC for customs duties and Khajane-2 in Karnataka. * Improved collection efficiency and customer repayment options through unique QR codes and a web-based module.
Management outlook: * The bank is undergoing a "transitional phase" with its "Bandhan 2.0 strategy" to evolve into a full-service commercial bank. * Expects improved growth and profitability in the upcoming quarters, with the full benefits of lower funding costs flowing from Q4 onwards. * Guided for credit costs to settle around 2.5% in 2-3 years, and 1.5% to 1.6% for the overall bank by FY27 exit. * Anticipates Net Interest Margins (NIM) to improve from the coming quarter. * Management also addressed concerns regarding Bihar election debt waivers, stating that no major problem is foreseen.
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Bandhan Bank Limited filed this with the NSE as a statutory disclosure, categorised under quarterly results. It is a primary document, not a recommendation, and the desk marks it high impact, which is the band that most often changes something.
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