Bandhan Bank , a prominent player in the Indian banking sector, is setting its sights on significant profit growth and portfolio diversification, according to recent statements from its CEO, Partha Pratim Sengupta.

Projected Profit Growth

Sengupta expressed optimism about the bank's future performance, forecasting substantial quarterly profit growth starting from the third quarter of fiscal year 2026 (Q3 FY26). This positive outlook is primarily attributed to an expected reduction in microfinance slippages, which have been a concern for the bank in recent years.

Portfolio Diversification Strategy

In a strategic move to strengthen its financial position, Bandhan Bank is actively working on diversifying its loan portfolio. The bank has made significant strides in increasing its secured loans segment, which is projected to reach 50.50% of the total portfolio by FY25. This shift towards a more balanced portfolio mix is likely to enhance the bank's risk management and stability.

Navigating Potential Challenges

Despite the optimistic long-term outlook, Sengupta acknowledged potential short-term challenges:

• Anticipated pressure on Net Interest Income (NII) in the first two quarters of the upcoming fiscal year
• Expected rate cuts by the Reserve Bank of India (RBI)

However, the CEO remains confident that these pressures will be mitigated by the third quarter through strategic deposit cost rationalization measures.

Looking Ahead

Bandhan Bank's proactive approach to portfolio diversification and its focus on reducing microfinance slippages demonstrate a clear strategy for sustainable growth. As the bank continues to evolve its business model, investors and market watchers will be keen to observe how these strategies translate into actual performance in the coming quarters.

The bank's ability to successfully navigate the changing interest rate environment while simultaneously diversifying its portfolio will be crucial in achieving its projected profit growth from Q3 FY26 onwards.

Bandhan Bank , a prominent player in India's banking sector, has reported its fourth quarter results for the fiscal year 2024-25, leading to mixed reactions from analysts despite showing some strong financial indicators.

Analyst Reactions

The Q4 results have prompted varied responses from financial analysts:

• Jefferies has maintained a 'Buy' rating on Bandhan Bank, raising the target price to ₹195.00. However, they have cut their earnings estimates for the bank.
• Nomura has kept a neutral stance on the stock with a target price of ₹165.00.

Financial Performance

Bandhan Bank's Q4 results showed a mixed picture:

• Net Interest Income (NII) decreased by 3.6% year-on-year to ₹2,756.00 crore.
• Operating profit fell by 14.5% compared to the same quarter last year.
• Despite these challenges, the bank's net profit for Q4 witnessed a remarkable surge, reaching ₹31,790.00 million, significantly surpassing market estimates.

Management Outlook and Future Expectations

The bank's management has provided insights into future expectations:

• Stress in the microfinance sector is expected to persist in H1 FY25, which will likely affect net interest margins (NIMs).
• The bank is strategically shifting from unsecured to secured loans, with the secured book now at 50.5%.
• NIMs are anticipated to moderate from the current 6.7%.
• Slippages may normalize to 1.5-2.0% from Q3.
• To offset potential impacts, the bank plans to focus on growth in retail and housing loans.

Dividend Announcement

Despite the mixed results, Bandhan Bank has declared a dividend of ₹1.50 per share for the fiscal year 2024-25, subject to necessary approvals.

Other Financial Highlights

• Gross Non-Performing Asset (GNPA) ratio slightly increased to 4.71%.
• Net Non-Performing Asset (NNPA) ratio remained stable at 1.28%.
• Deposits grew by 12% year-on-year, reaching ₹1.51 trillion as of March 2025.

Conclusion

While Bandhan Bank's Q4 results show strong growth in net profit and deposits, the decrease in NII and operating profit, along with expectations of continued stress in the microfinance sector, have led to mixed reactions from analysts. The bank's strategic shift towards secured loans and focus on retail and housing segments demonstrate its efforts to navigate the challenging environment. The performance in the coming quarters will be crucial in determining the bank's trajectory amidst these varying indicators and sector-wide pressures.