Bandhan Bank Limited

Private Sector Bank

Annual Returns

Cumulative Returns and Drawdowns



Fundamentals














Ownership




Margined





AI Summary

asof: 2026-09-16

Bandhan Bank — Recent Corporate Developments

1. Headwinds and Challenges

Margin and revenue pressure. NIM stood at 6.2% in Q1FY27, down 16 bps YoY, and Total Revenue (Net) at ₹35.2 bn grew only 1.2% YoY while declining 1.2% QoQ. Non-Interest Income fell 16.8% YoY to ₹6.0 bn, with the Bank noting that Q1FY26 other income had included a treasury gain of ~₹2.5 bn; excluding that treasury income, non-interest income growth would have been ~22% YoY in Q1FY27.

Operating profit decline. Operating Profit was ₹13.6 bn, down 18.6% YoY and 5.8% QoQ. Operating Expenses rose 19.4% YoY to ₹21.7 bn, and OPEX/Assets at 4.3% was up 41 bps YoY.

Deposit contraction and mix. Total Deposits of ₹1,648.9 bn grew 6.6% YoY but declined 0.9% QoQ. CASA Ratio at 29.4% improved 234 bps YoY but the Bank continues to carry a relatively low CASA share. Bulk Deposits (incl. CDs) averaged ₹414.4 bn in Q1FY27, down 9.7% YoY.

EEB concentration and stress. The EEB (Group + SBAL) share of gross advances reduced from 39.5% in Jun’25 to 33.8% in Jun’26, but EEB remains the largest single portfolio block. EEB stress pool stood at ₹39.8 bn in Jun’26, with EEB NPA at ₹31.0 bn and PCR on the stress pool at 75.4%, down from 77.6% in Mar’26. EEB average advances declined 3.4% YoY in Q1FY27.

Return ratios. ROA was 1.0% (down 11 bps QoQ) and ROE 7.7% (down 82 bps QoQ), indicating profitability remains below the levels implied by the Bank’s strategic objectives.

Borrowings dependence. Borrowings rose 119.4% YoY to ₹133.8 bn, and Balance with Banks/Money at call fell 60.4% YoY to ₹16.9 bn.

2. Tailwinds and Growth Prospects

Strong advances growth. Gross Advances reached ₹1,555.6 bn, up 16.4% YoY and 0.9% QoQ. Average Total Advances grew 14.4% YoY to ₹1,514.2 bn in Q1FY27.

Portfolio diversification. Secured Mix rose to 56.8%, up 473 bps YoY and 67 bps QoQ. Non-EEB Book grew 27.4% YoY to ₹1,029.1 bn. Within this, Retail Assets average balances grew 48.8% YoY and Wholesale Banking 35.1% YoY; Housing Finance average advances grew 7.8% YoY.

Asset quality improvement. GNPA Ratio improved to 3.1% (down 182 bps YoY, 12 bps QoQ) and NNPA to 0.9% (down 43 bps YoY, 4 bps QoQ). Credit Cost fell to 1.8% (down 167 bps YoY, 15 bps QoQ). Fresh Slippages declined to ₹10.8 bn in Q1FY27 from ₹15.5 bn in Q1FY26. The Bank completed an NPA sale to ARC of ₹26.0 bn in Q3FY26 and ₹1.7 bn in Q1FY27.

Liability granularity. Retail Deposits reached ₹1,219.6 bn, up 15.6% YoY. Average Retail TD grew 23.4% YoY and average CA grew 31.6% YoY. Average Retail Deposits grew 15.8% YoY.

Collection resilience. EEB collection efficiency was 98.9% for Q1FY27 (quarterly) and 98.5% in Jun’26 (monthly). Full-paying customers rose to 97.3% of customers and 97.8% of receivables in Jun’26, versus 96.3% and 97.1% in Mar’26. Non-paying customers were 0.9% of customers and 0.8% of receivables.

Regional diversification. Share of Non-East stood at 62.1% (up 30 bps YoY). The Bank operates a pan-India network across East, Central, South, West, North-East and North regions.

Digital and franchise momentum. 92% of Savings Accounts were opened digitally, 59% of RDs invested digitally, 28% online deposit contribution to overall fixed deposits, 90% CBDT payments digitally, and 233% QoQ growth in total transaction value from the Payment Aggregator business. The Bank received the ET Edge Best BFSI Brands Award 2026, the 2025 Gallup Exceptional Workplace Award, and DIGIXX Awards 2026 recognition.

Capital and ratings. Shareholders’ Funds rose 4.6% YoY to ₹261.7 bn. Non-Convertible Debentures are rated [ICRA]AA- (Stable) / CRISIL AA-/Stable, and Certificates of Deposit CRISIL A1+ / [ICRA] A1+.

3. Key Risks

  • EEB credit risk: EEB stress pool of ₹39.8 bn with PCR on stress pool declining to 75.4% in Jun’26 from 77.6% in Mar’26; EEB NPA at ₹31.0 bn.
  • Concentration risk: EEB remains the largest portfolio segment despite reduction to 33.8% of gross advances.
  • Margin risk: NIM compression of 16 bps YoY and rising OPEX/Assets.
  • Deposit franchise risk: QoQ deposit decline of 0.9% and reliance on relatively expensive term/bulk deposits.
  • Wholesale credit concentration: FIG, H&E — 96% of outstanding rated A- and above; CBG — 76% rated BBB+ and above (external ratings, as on 30 Jun’26).
  • Governance/leadership transition: The Board recommended re-appointment of Mr. Rajinder Kumar Babbar as Whole-time Director effective March 08, 2027; re-appointment of Mr. Amitava Goswami as Chief Compliance Officer effective November 29, 2026; extension of Mr. Sandip Kumar Bubna as Interim CAE/HIA till February 26, 2027 or until a new candidate joins; and appointment of Mr. Nitin Arora as Chief of Internal Vigilance effective September 22, 2026.
  • Shareholder voting restriction: At the 12th AGM held August 24, 2026, voting rights of Bandhan Financial Holdings Limited were restricted to 26% of total voting rights in accordance with Section 12(2) of the Banking Regulation Act, 1949.

4. Management Guidance Versus Observed Performance

The Q1FY27 presentation sets out strategic objectives — portfolio diversification (higher secured mix), strengthening asset quality, liability resilience (higher retail deposits share), and improving profitability — and reports progress against each.

  • Portfolio diversification: Secured Mix rose to 56.8% (up 473 bps YoY), and Non-EEB Book grew 27.4% YoY, consistent with the stated calibrated shift toward secured assets.
  • Asset quality: GNPA fell to 3.1% and Credit Cost to 1.8%, with Fresh Slippages declining YoY, consistent with the stated focus on disciplined credit selection, diversification and recovery.
  • Liability resilience: Retail Deposits grew 15.6% YoY and average Retail Deposits 15.8% YoY, consistent with the stated retail deposit strategy, though Total Deposits declined 0.9% QoQ.
  • Profitability: ROA at 1.0% and ROE at 7.7% declined QoQ, and Operating Profit fell 18.6% YoY, indicating that the stated objective of embedding predictability in return ratios is not yet reflected in the reported quarter’s profitability.

Investor engagement and governance events. Bandhan Bank participated in the UBS India Summit 2026 group meeting in Mumbai on September 11, 2026, meeting institutional investors including Axis Asset Management Co. Ltd, Balyasny Asset Management (Hong Kong) Pte. Ltd, North Rock Capital Management (SG) Pte. Ltd, PAGAC Advisors India Pvt. Ltd, Pinpoint Asset Management (Singapore) Pte. Ltd, and Tara Capital Partners. The Bank also participated in the Jefferies India Forum 2026 on September 17, 2026, in Gurugram and the J.P. Morgan India Conference 2026 on September 21, 2026, in Mumbai, with the presentation made available on the Bank’s website. At the 12th AGM on August 24, 2026, all seven ordinary and special resolutions were passed with the requisite majority, and Mr. Debasish Panda was appointed as an Independent Director and Non-Executive Chairman.

Broker Narrative

Broker narrative evolved from cautious Neutral with growth optimism to defensive Hold, as persistent funding cost and margin pressures forced a FY27 RoA guidance cut. Early concerns about deposit costs and opex intensified, while credit growth and deposit accretion tailwinds waned, leading to a lower target multiple.

Fears that came true

  • Rising cost of deposits materialized, with savings account rates increasing and funding costs elevated in the last report.
  • Margin moderation materialized as the bank guided for stable NIM instead of the earlier expected 30bps improvement.
  • Elevated operating expenses materialized with technology costs up 80% YoY, salary increments, and a one-time gratuity provision.
  • Higher funding costs and bulk deposits mix materialized, as deposit growth trailed loan growth and bulk deposits declined 13% YoY.

Optimism that failed

  • Healthy credit growth in Retail and SME segments failed, as retail loan sourcing was impacted by regulatory norms and loan growth slowed below system.
  • Deposit accretion from discontinuance of INR2k notes failed, as deposit growth trailed loan growth at 7% YoY.

Broker Timeline

38 broker calls · 2023-06-01 to 2026-07-22

   

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