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SMA-0 elevation due to holiday demand raising
View Risks →Bandhan Bank Limited — Q1 FY26
Bandhan Bank's Q1 FY26 results reflect continued stress in the microfinance (EV) segment, with total advances declining 2.5% QoQ due to a 7% contraction in the EV book.
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Bandhan Bank's Q1 FY26 results reflect continued stress in the microfinance (EV) segment, with total advances declining 2.5% QoQ due to a 7% contraction in the EV book. Non-EV portfolio grew 27% YoY, driving secured loan mix to 52%. Net profit stood at ₹372 crore, improving sequentially from ₹318 crore in Q4 FY25. NIM compressed to 6.4% from 6.7% QoQ due to mix shift and repo rate cuts, partly offset by 19bps reduction in cost of funds. Credit cost improved to 3.5% from 3.9% QoQ. Management expects EV portfolio to stabilize in H2, with overall credit cost guidance of 2.5% for FY26. Key risk: SMA-0 elevation due to procedural changes may persist, but management considers it recoverable.
बंधन बैंक की पहली तिमाही के नतीजे बताते हैं कि छोटे कर्ज (माइक्रोफाइनेंस) वाले हिस्से में अभी भी दबाव है। कुल कर्ज पिछली तिमाही से 2.5% घट गया, क्योंकि छोटे कर्ज में 7% की गिरावट आई। दूसरे कर्ज 27% बढ़े, जिससे सुरक्षित कर्ज का हिस्सा 52% हो गया। मुनाफा ₹372 करोड़ रहा, जो पिछली तिमाही के ₹318 करोड़ से ज़्यादा है। ब्याज कमाई का अंतर (NIM) 6.4% रहा, जो पहले 6.7% था। कर्ज देने की लागत (क्रेडिट कॉस्ट) 3.5% हुई, जो पहले 3.9% थी। कंपनी को उम्मीद है कि छोटे कर्ज का हिस्सा साल की दूसरी छमाही में स्थिर होगा और पूरे साल कर्ज देने की लागत 2.5% रहेगी। कुछ कर्जों में देरी हो सकती है, लेकिन कंपनी का मानना है कि वे वसूल हो जाएंगे।
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Read Transcript →Quarter Snapshot
EV Portfolio (AUM)
₹52,812 Cr
-15% YoY
Microfinance book contracted due to strategic controls amid sectoral stress.
Non-EV Portfolio Growth
27% YoY
+27% YoY
Driven by retail assets (+78% YoY), wholesale banking (+32% YoY), and housing (+15% YoY).
Secured Loan Mix
52%
+9pp YoY
Secured book grew 29% YoY, now over half of total advances.
Collection Efficiency (EV)
97.6%
-0.3pp QoQ
Marginal decline due to procedural change in holiday demand raising; management expects recovery.
What Changed vs Last Quarter
NEW
Credit cost guidance of 2.5% for FY26
Management reiterated target of 2.5% credit cost for full year, with sequential improvement expected each quarter.
NEW
EV portfolio growth of 5-8% in FY26
EV book expected to grow 5-8% for the full year, with H2 recovery compensating for H1 decline.
NEW
Overall advances growth of ~10% in FY26
Total advances growth target of around 10% for FY26, driven by non-EV segments growing at 26-27%.
NEW
NIM stabilization in H2 FY26
Management expects NIM compression in Q2 but stabilization in H2 due to lower slippages and deposit repricing benefits.
DROPPED
Advances growth of 15-17% over next 3 years
Targeting 15-17% year-over-year advances growth, with secured mix exceeding 55% by FY27.
DROPPED
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.
DROPPED
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.
DROPPED
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.
NEW RISK
SMA-0 elevation due to holiday demand raising
Procedural change in raising demand on holidays increased SMA-0 pool; management says recoverable but may persist in Q2 due to festivals.
NEW RISK
Competitive aggression in individual microfinance loans
Analyst raised concern about aggressive lending by some players; management acknowledged risk but believes industry discipline will hold.
NEW RISK
Vintage NPA trends in EV portfolio
Analyst noted 4%+ NPA in recent vintages; management attributed to industry stress and expects improvement as new guardrails stabilize.
RISK GONE
Elevated MFI stress persists
Credit costs remain high at 3.9% due to continued stress in microfinance; management expects H1 FY26 to be challenging.
RISK GONE
Regional concentration in West Bengal
West Bengal accounts for 23% of advances and 40% of deposits; localized disruptions (e.g., Murshidabad) could impact collections.
RISK GONE
Recent vintages show higher NPAs
Analyst noted that loans disbursed in FY24 have NPA rates of 3.5-4%, raising concerns about underwriting quality.
🤫 Topics management stopped discussing
Mentioned in Q2 FY25, Q3 FY25, Q4 FY25
Credit costs remain high at 3.9% due to continued stress in microfinance; management expects H1 FY26 to be challenging.
Mentioned in Q1 FY25, Q2 FY25
Overall advances growth target of 18% ± 1%, with EEB growing at 10%-12% and secured book growing faster.
Mentioned in Q1 FY25, Q2 FY25
Tier 1 ratio (including H1 profits) at ~14% is adequate for now, but rapid secured book growth and elevated credit costs could necessitate capital raise if stress persists.
Mentioned in Q3 FY25, Q4 FY25
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.
Fast read
Guidance and risk preview
Management reiterated target of 2.5% credit cost for full year, with sequential improvement expected each quarter.
Procedural change in raising demand on holidays increased SMA-0 pool; management says recoverable but may persist in Q2 due to festivals.
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