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Political debt waiver in Bihar
View Risks →Bandhan Bank Limited — Q2 FY26
Bandhan Bank's Q2 FY26 results were below internal expectations, with PAT plunging 88% YoY to INR 112 crore due to margin compression and elevated credit costs.
bearish
high
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Bandhan Bank's Q2 FY26 results were below internal expectations, with PAT plunging 88% YoY to INR 112 crore due to margin compression and elevated credit costs. NIM fell to 5.8% (vs 6.4% QoQ) as the bank proactively passed on 75bps repo cut and recalculated MCLR, impacting yields. EEB stress persisted with gross slippages of INR 1,118 crore, though SMA 1/2 declined sequentially. Non-EEB advances grew 24% YoY, driving secured mix to 55%. Management expects NIM to trough in Q2 and improve from Q4 as deposit repricing benefits flow through. Credit cost guidance of 2.5-3% for EEB by FY27 exit remains. Key risk: political debt waiver rhetoric in Bihar could disrupt collections, though management sees no material impact yet.
बैंडन बैंक का Q2 FY26 का नतीजा उम्मीद से कम रहा। मुनाफा (PAT) 88% गिरकर ₹112 करोड़ रह गया, क्योंकि ब्याज दरों में कमी और कर्ज पर ज्यादा घाटा हुआ। बैंक ने रेपो रेट में 0.75% की कटौती ग्राहकों को दी, जिससे कमाई पर असर पड़ा। खराब कर्ज (slippages) ₹1,118 करोड़ रहा, लेकिन शुरुआती संकेत (SMA) कम हुए। गैर-कमजोर कर्ज (Non-EEB) 24% बढ़ा, जिससे सुरक्षित कर्ज का हिस्सा 55% हो गया। बैंक का कहना है कि ब्याज दर का दबाव Q2 में खत्म होगा और Q4 से सुधार शुरू होगा। कमजोर कर्ज पर घाटा 2.5-3% रहने का अनुमान है। बिहार में कर्ज माफी की बात से वसूली पर खतरा है, लेकिन अभी बड़ा असर नहीं दिखा।
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Gross Advances
INR 1.40 lakh crore
+7% YoY
Gross advances grew 7% YoY to INR 1.40 lakh crore, driven by non-EEB growth of 24% YoY.
CASA Ratio
28%
+100bps QoQ
CASA ratio improved to 28% from 27% last quarter, aided by sequential CASA growth of 5.6%.
EEB Portfolio
INR 51,733 crore
-13% YoY
EEB portfolio declined 13% YoY due to technical write-offs and subdued growth amid industry guardrails.
Secured Loan Mix
55%
+8pp YoY
Secured loan mix improved to 55% from 47% a year ago, reflecting diversification strategy.
What Changed vs Last Quarter
NEW
Credit cost target of 2.5-3% for EEB by FY27 exit
Management expects EEB credit cost to settle at 2.5-3% by FY27 exit, with overall bank credit cost at 1.5-1.6%.
NEW
NIM improvement from Q4 onwards
NIM is expected to bottom at 5.8% in Q2 and improve from Q4 as term deposit repricing benefits flow through.
NEW
EEB growth to resume from Q3
EEB portfolio is expected to see gradual growth from Q3 onwards as operating environment shows signs of recovery.
NEW
Secured mix to increase to 57-58% over 7 quarters
Secured loan mix is expected to increase further by 2-3 percentage points over the next 6-7 quarters.
DROPPED
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.
DROPPED
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.
DROPPED
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%.
DROPPED
NIM stabilization in H2 FY26
Management expects NIM compression in Q2 but stabilization in H2 due to lower slippages and deposit repricing benefits.
NEW RISK
Political debt waiver in Bihar
Opposition manifestos in Bihar elections propose debt waivers for SHGs, which could disrupt collections if implemented.
NEW RISK
Elevated EEB slippages persist
EEB slippages remained high at INR 1,118 crore, and management expects stress to continue for 1-2 more months.
NEW RISK
NIM compression from MCLR recalculation
The 200bps MCLR cut and repo rate pass-through compressed NIM more than expected, with full benefit delayed to Q4.
NEW RISK
Slow EEB customer addition
Net new EEB customer addition has stagnated due to industry-wide ineligibility, limiting growth potential.
RISK GONE
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.
RISK GONE
NIM compression from secured mix shift and rate cuts
Growing secured loan share (lower yield) and repo rate cuts pressure NIM; management expects stabilization only in H2.
RISK GONE
Competitive aggression in individual microfinance loans
Analyst raised concern about aggressive lending by some players; management acknowledged risk but believes industry discipline will hold.
RISK GONE
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.
🤫 Topics management stopped discussing
Mentioned in Q1 FY26, Q2 FY25, Q3 FY25, Q4 FY25
Growing secured loan share (lower yield) and repo rate cuts pressure NIM; management expects stabilization only in H2.
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.
Fast read
Guidance and risk preview
Management expects EEB credit cost to settle at 2.5-3% by FY27 exit, with overall bank credit cost at 1.5-1.6%.
Opposition manifestos in Bihar elections propose debt waivers for SHGs, which could disrupt collections if implemented.
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