Bandhan Bank , a prominent player in the Indian banking sector, has set ambitious growth targets for the coming years, aiming to significantly outpace the industry despite a general slowdown in loan growth. The bank's strategic shift towards secured lending and its plans for portfolio diversification are at the forefront of its growth strategy.

Ambitious Growth Targets

Bandhan Bank has announced its intention to achieve a 15-17% credit growth Compound Annual Growth Rate (CAGR) over the next three years. This target is particularly noteworthy given the current industry trend, which has seen loan growth decline from 20% to 9.8% over the past five quarters.

Shifting Portfolio Composition

The bank's growth strategy is underpinned by a significant shift in its loan portfolio composition:

• Secured Portfolio Expansion: The secured portfolio has shown robust growth, expanding by 27% year-on-year. This growth is primarily driven by:

  • Housing finance
  • Retail banking
  • Commercial banking

• Microfinance Contraction: In contrast, the bank's microfinance segment has contracted by 15%.

Focus on Secured Lending

Bandhan Bank is accelerating its transition towards secured lending, with impressive progress already made:

• Secured assets increased from 42% of the loan book to 52%.
• The bank expects this proportion to increase by another 5-6 percentage points.

Microfinance Outlook

Despite the current contraction in the microfinance segment, CFO Rajeev Mantri provided insights into the expected recovery:

• Sequential recovery in the microfinance business is anticipated.
• A moderate 5% growth is projected for the current year in this segment.

Impact on Net Interest Margins

The bank acknowledges potential near-term impacts on its net interest margins due to:

• Expected repo rate cuts
• Portfolio shifts toward secured assets

However, the bank expects support for margin recovery from:

• Deposit rate cuts
• Lower slippages in the second half of the fiscal year

Recent Investor Meetings

According to the LODR data, Bandhan Bank recently participated in two significant investor events:

1. Motilal Oswal 21st Annual Global Investor Conference
2. Ashwamedh, Elara India Dialogue

These meetings, attended by various asset management companies, insurance firms, and investment entities, underscore the bank's commitment to transparent communication with investors and analysts about its growth strategies and financial outlook.

As Bandhan Bank navigates the changing landscape of India's banking sector, its strategic focus on secured lending and ambitious growth targets position it as a key player to watch in the coming years. The bank's ability to execute its plans while managing the transition in its loan portfolio will be crucial in achieving its stated objectives.

Bandhan Bank reported a net profit of ₹372.00 crore for Q1 FY26, down 65% from ₹1,063.00 crore in Q1 FY25, though up 17% sequentially from ₹318.00 crore in Q4 FY25. The bank's performance was impacted by challenges in the Emerging Entrepreneurs Business (EEB) segment, which includes microfinance loans.

Key Financial Highlights

• Gross advances stood at ₹1.34 lakh crore with 6% YoY growth
• Total deposits grew 16% YoY to ₹1.55 lakh crore
• Net interest income fell 8% YoY to ₹2,757.00 crore
• Net interest margin (NIM) at 6.4%, down from 6.7% in Q4 FY25
• Gross NPA stood at 5.0% and Net NPA at 1.4%
• Capital adequacy ratio remained strong at 19.4% with Tier I capital at 18.6%
• Return on Assets (ROA) was 0.8% and Return on Equity (ROE) was 6% on an annualized basis

Segment Performance

The EEB portfolio declined 15% YoY to ₹52,812.00 crore due to industry guardrails implementation. However, the non-EEB portfolio grew 27% YoY and now accounts for 60% of total advances. The secured loan portfolio grew 29% YoY and now constitutes 52% of total advances.

Deposits and Liabilities

Retail term deposits demonstrated strong momentum, growing by 34% YoY. CASA deposits now account for 27% of the total deposit base. The overall share of retail deposits (CASA + Retail Term Deposits) remains steady at 68%.

Asset Quality

The bank undertook technical write-offs of ₹1,047.00 crore during the quarter. Gross slippages at the overall bank level declined to ₹1,553.00 crore in Q1 FY26 compared to ₹1,748.00 crore in the previous quarter. The Provision Coverage Ratio (including technical write-offs) improved to 87.3%, compared to 86.5% in the previous quarter.

Management Commentary

Partha Pratim Sengupta, Managing Director and CEO of Bandhan Bank, stated, "Despite these headwinds, we are performing reasonably well when benchmarked against industry peers & competitors with sequential improvement in our financial performance. We anticipate challenges in the EEB segment to persist until the second quarter of FY26, albeit on an improving trajectory."

The bank expects to witness a gradual and steady recovery in the EEB segment over the coming months, with a positive bias emerging in the second half of the fiscal year. Management guidance suggests credit costs may improve to 2.5% for the full year FY26.

Outlook

Bandhan Bank remains focused on prudent risk management, identifying new avenues for growth, and enhancing operational efficiency. The bank is expanding its retail liability sourcing capabilities and has successfully enabled all 4,400 banking units to offer retail term deposits. The management expects overall loan growth of 15-17% for FY26, with EEB portfolio growth projected between 5-8%.

As the microfinance environment continues to stabilize, Bandhan Bank is confident in its ability to leverage emerging opportunities while maintaining its strategic focus on balance sheet resilience and funding stability.