Bandhan Bank FY25 Annual Earnings Summary
4 quarters covered · ₹0 Cr revenue · ₹2,744 Cr PAT · 0.0% average EBITDA margin.
Quarter-by-quarter progression
Management promises made during the year
Promise tracking available after 2+ quarters of coverage.
Risks flagged during the year
The increase in risk weights on EEB portfolio to 125% reduced CRAR by 362 bps to 15%, potentially limiting growth if capital is not managed.
Q2 FY25 · highEEB slippages increased to INR 752 crore in Q2, and SMA-0/1/2 pools expanded. Management expects elevated slippages in Q3, with uncertainty on recovery timing.
Q3 FY25 · highDespite SMA 0 improvement, SMA 1+2 buckets increased, and management expects Q4 slippages to remain substantial (though lower than Q3).
Q4 FY25 · highCredit costs remain high at 3.9% due to continued stress in microfinance; management expects H1 FY26 to be challenging.
Q1 FY25 · mediumManagement noted stress in SMA books from Punjab and Maharashtra, which could lead to higher slippages.
Q1 FY25 · mediumThe bank is operating with an interim MD&CEO; the board has not yet submitted names to RBI, creating leadership uncertainty.
Q1 FY25 · mediumCASA ratio fell to 33.4% from 36% QoQ, and competitive deposit market may keep cost of funds elevated, pressuring NIMs.
Q2 FY25 · mediumShift towards secured assets (lower yield) could pressure NIMs. Management acknowledged potential yield stress in coming quarters.
Q2 FY25 · mediumDespite Bandhan's unique customer share of 60%, industry-wide over-leveraging and credit freeze risks could impact asset quality. RBI actions on MFI lenders may add systemic risk.
Q3 FY25 · mediumAnalyst raised concern about potential Karnataka legislation; management downplayed risk given small exposure (INR 740 crore), but uncertainty remains.
Q3 FY25 · mediumAs secured mix increases, NIM is expected to moderate further, potentially pressuring profitability if volume growth doesn't compensate.
Q3 FY25 · mediumAdjusted OpEx grew 23% YoY, higher than NII growth of 12%, driven by technology investments and branch expansion, which may weigh on near-term efficiency.
What changed through the year
Q1 FY25 · Loan growth of 18-20% for FY25
Management expects overall loan book growth of 18-20% for FY25, with secured book growing faster than EEB.
Q1 FY25 · Deposit growth higher than loan growth
Deposit growth will continue to outpace advances growth, with focus on retail deposits.
Q1 FY25 · NIM maintained at 7-7.5%
Net interest margin is expected to remain in the range of 7-7.5% for FY25.
Q1 FY25 · Credit cost guidance of 1.8-2% for FY25
Credit cost for FY25 is expected to be in the range of 1.8-2%, despite Q1 coming in lower at 1.6%.
Q2 FY25 · Credit cost guidance of 1.8%-2% for FY25
Management expects full-year credit cost to remain within 1.8%-2% of advances, with Q3 potentially elevated but Q4 showing improvement.
Q2 FY25 · Advances growth of 18% ± 1% for FY25
Overall advances growth target of 18% ± 1%, with EEB growing at 10%-12% and secured book growing faster.
Q2 FY25 · NIM guidance of 7%-7.5% for FY25
Net interest margin expected to remain in the 7%-7.5% range, with some moderation in coming quarters due to product mix shift.
Q2 FY25 · OpEx to assets ratio similar to FY24
Operating expenses to average assets ratio expected to be at similar levels as FY24, around 3.7%-3.8%.
Q3 FY25 · Secured mix target of 55%+ by FY27
Management aims to increase secured advances share from 49% to over 55% by FY27, with secured book growing 3x faster than EEB.
Q3 FY25 · Credit cost target of ~2% in near term, 1.5-1.6% by FY27
CFO guided for overall credit cost to stabilize around 2% in the near future and decline to 1.5-1.6% by FY27 as secured mix improves.
Q3 FY25 · NIM to moderate further
CEO stated NIM will continue to moderate as the bank shifts to secured assets, but ROA target remains near 2% through volume growth and cost control.
Q3 FY25 · EEB disbursements to be calibrated in Q4
Management indicated Q4 EEB disbursements will be moderated versus prior year, with focus on renewals for good-quality borrowers.
Q4 FY25 · Advances growth of 15-17% over next 3 years
Targeting 15-17% year-over-year advances growth, with secured mix exceeding 55% by FY27.
Q4 FY25 · Credit cost target of 1.5-1.6% over 2-3 years
Expect credit costs to improve from current elevated levels to 1.5-1.6% on a full-year basis over the next 2-3 years.
Q4 FY25 · ROA target of 1.8-1.9% over 2-3 years
Aiming for return on assets of 1.8-1.9% over the next 2-3 years, driven by better asset quality and operating leverage.
Q4 FY25 · OpEx to asset ratio to increase 10-20bps over 2 years
Operating expenses to average assets ratio expected to rise by 10-20 basis points from current levels over the next two years due to investments.