Bandhan Bank cuts Q4FY27 ROA guidance to 1.2-1.4% on cost pressures
Bandhan Bank delivered strong Q1FY27 results with PAT rising 35% to ₹502 crore and asset quality improving. Despite this, management cut Q4FY27 ROA guidance due to external headwinds including higher deposit costs and technology expenses, signaling potential margin pressure ahead.
*this image is generated using AI for illustrative purposes only.
Bandhan Bank reported a 35% year-on-year rise in net profit to ₹502 crore for Q1FY27, driven by lower credit costs and stable net interest margins, while simultaneously revising its Q4FY27 return on assets (ROA) guidance downward to 1.2%–1.4% from the earlier target of 1.6%–1.8%. The bank attributed the guidance cut to external headwinds, specifically elevated funding costs and rising technology-related expenditures linked to global supply chain constraints, rather than internal operational issues.
The Board of Directors approved the unaudited financial results for the quarter ended June 30, 2026, at a meeting held on July 21, 2026. Total income from operations stood at ₹6,234.38 crore, compared to ₹6,201.49 crore in the corresponding period of the previous year. Net interest income (NII) grew 5.9% YoY to ₹2,921 crore, with the net interest margin (NIM) holding steady at 6.2%. Management clarified that the 40 basis point reduction in ROA guidance stems from an approximate 30 basis point stretch in NIMs due to higher deposit rates and a 10 basis point stretch in operating expenses.
Key Financial Metrics
The table below summarises Bandhan Bank's key financial performance indicators for Q1FY27 compared to Q1FY26:
| Particulars: | Q1 FY27 (₹ in crore) | Q1 FY26 (₹ in crore) | YoY Growth |
|---|---|---|---|
| Net Profit | 502 | 372 | 34.90% |
| Net Interest Income | 2,921 | 2,757 | 5.90% |
| Gross Advances | 1,55,555 | 1,33,624 | 16.40% |
| Total Deposits | 1,64,886 | 1,54,666 | 6.60% |
| Gross NPA (%) | 3.10% | 5.00% | -182 bps |
| Net NPA (%) | 0.90% | 1.40% | -43 bps |
Asset Quality and Portfolio Mix
Asset quality improved sequentially, with Gross NPA declining to 3.1% from 3.27% in Q4FY26, and Net NPA improving to 0.9% from 0.97%. Fresh slippages increased modestly to ₹1,079 crore (₹10.8B) from ₹1,028 crore (₹10.3B) in the previous quarter. Within the EEB segment, slippages were ₹604 crore, down from ₹690 crore in Q4FY26. The provision coverage ratio, including technical write-offs, stood at 85.9% as of June 30, 2026.
The bank continued its diversification strategy, with non-EEB advances growing 27% YoY to constitute two-thirds of the loan book. Secured assets grew 27% YoY, now making up 57% of total advances. Retail deposits, including CASA and retail term deposits, grew 16% YoY, driving the CASA ratio to 29.4%. Conversely, bulk deposits declined 13% YoY, reducing their share to 26% of total deposits.
Management Guidance and Outlook
Managing Director Partha Pratim Sengupta stated that the medium-term strategic objective remains unchanged, but the timeline for achieving the earlier ROA aspiration may extend due to the prevailing external environment. Key factors cited include geopolitical developments in the Middle East affecting energy costs and technology supply chains, unpredictable monsoon patterns, and durable liquidity pressures leading to higher deposit rates despite no change in the repo rate.
| Guidance Parameter: | Details |
|---|---|
| Q4 FY27 ROA Guidance (Revised) | 1.2% to 1.4% |
| Q4 FY27 ROA Guidance (Earlier) | 1.6% to 1.8% |
| NIM Outlook | Broadly stable at 6.2% |
| Credit Cost Guidance | 1.6% to 1.8% (unchanged) |
Future ROA improvement is expected to be driven by other income growth (10–20 basis points uplift) and marginal improvements in credit costs. Operating expenses for the quarter rose 19% YoY to ₹2,166 crore, partly due to a one-time gratuity provision of ₹61 crore under the new wage code and increased IT costs, which now account for approximately 8% of total opex.
Governance Updates
The Board appointed Mr. Vinay Jain as Interim Chief Financial Officer and Key Managerial Personnel, effective September 26, 2026, succeeding Mr. Rajeev Mantri who resigns effective September 25, 2026. The term of Mr. Prakash E as Chief of Internal Vigilance was extended on an interim basis until September 30, 2026. The 12th Annual General Meeting is scheduled for August 24, 2026, with the dividend record date fixed as August 17, 2026.
Historical Stock Returns for Bandhan Bank
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -0.18% | +0.13% | -16.31% | +0.65% | -1.15% | -34.45% |
How might the sustained elevation in deposit rates impact Bandhan Bank's Net Interest Margins if the RBI maintains the current repo rate stance?
What specific measures is management implementing to mitigate the rising technology-related expenditures driven by global supply chain constraints?
Could the recent appointment of an Interim CFO signal broader strategic shifts or leadership instability that might affect investor confidence in the medium term?
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