Bandhan Bank has unveiled its strategic plans for the coming years, focusing on sustainable growth and a shift towards secured lending. The bank aims to achieve a 15-16% loan book growth in fiscal years 2026 and 2027, marking a significant change in its lending approach.

Shift Towards Secured Lending

The bank has made substantial progress in increasing its secured loan portfolio, which has grown from 48-50% to 52%. This shift represents a strategic move to balance the bank's risk profile and ensure more stable long-term growth.

Moderation in Microfinance Growth

Bandhan Bank, known for its strong presence in the microfinance sector, is expecting a moderation in this segment's growth. The bank projects microfinance segment growth to slow down to 8-10% in FY26, a notable decrease from its previous aggressive expansion strategy.

Financial Performance and Outlook

The bank has maintained its full-year credit cost guidance at 2.5%. However, it anticipates some fluctuations throughout the year:

• Q2: Expected credit cost of 3%
• Q4: Potential tapering to 2%

Bandhan Bank reported mixed financial results for the first quarter of FY26:

Challenges and Adaptations

The bank faces pressure on its net interest margins due to rising funding costs. To counteract this, Bandhan Bank has implemented strategic rate hikes:

• Last quarter: 25 basis points increase
• From July: 75 basis points increase

Industry Impact

New regulatory guidelines implemented from April 1 have impacted industry growth. However, the bank reports improvements in delinquencies and slippages, indicating potential positive outcomes from these regulatory changes.

Bandhan Bank's strategic shift towards secured lending and moderated growth in microfinance signifies a mature approach to sustainable banking in a changing regulatory environment. As the bank navigates these changes, its performance in the coming quarters will be crucial in determining the success of its new strategy.

Bandhan Bank , a prominent private sector lender, reported a sharp decline in its first-quarter profits for the current fiscal year, although the results surpassed market expectations. The bank's financial performance reflects challenges in revenue generation and asset quality.

Profit Nosedives, Yet Exceeds Forecasts

Bandhan Bank announced a net profit of ₹370.00 crore for the first quarter, marking a substantial 65% decrease from ₹1,063.00 crore recorded in the same period last year. Despite this significant drop, the bank's performance exceeded analyst projections of ₹340.00 crore, demonstrating resilience in a challenging economic environment.

Revenue Dips Marginally

The bank's revenue showed a slight contraction, decreasing to ₹5,470.00 crore from ₹5,536.00 crore year-over-year. This marginal decline of 1.2% suggests that Bandhan Bank is facing headwinds in its core business operations.

Asset Quality Concerns

Bandhan Bank's asset quality metrics showed signs of stress during the quarter:

• Gross Non-Performing Assets (GNPA) ratio increased to 4.96% from 4.71% in the previous quarter.
• Net Non-Performing Assets (NNPA) ratio rose to 1.36% from 1.28% quarter-over-quarter.

This deterioration in asset quality could be a cause for concern and may require close monitoring in the coming quarters.

Financial Performance at a Glance

While Bandhan Bank has managed to outperform analyst expectations in terms of profitability, the significant year-over-year decline in net profit and the deteriorating asset quality metrics highlight the challenges faced by the bank. The marginal decrease in revenue further underscores the difficult operating environment.

As the financial year progresses, stakeholders will likely keep a close eye on Bandhan Bank's strategies to improve asset quality and drive revenue growth in the face of ongoing economic uncertainties.