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West Bengal concentration in EB book
View Risks →Bandhan Bank Limited — Q3 FY26
Bandhan Bank's Q3 FY26 results show a PAT of INR 206 crore, up 84% QoQ but down 52% YoY, impacted by a one-time gratuity provision of INR 120 crore and NPA sale costs.
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Bandhan Bank's Q3 FY26 results show a PAT of INR 206 crore, up 84% QoQ but down 52% YoY, impacted by a one-time gratuity provision of INR 120 crore and NPA sale costs. Gross advances grew 10% YoY to INR 1.45 lakh crore, with the secured book now at 57% of advances. NIM improved sequentially to 5.9% as cost of funds eased. Asset quality improved: GNPA fell to 3.3% from 5.1% last quarter, aided by ARC sales of INR 3,165 crore. Management expects credit cost to trend toward 1.6-1.7% by FY27 end, but near-term earnings remain pressured by elevated provisions and CASA softness. Key risk: further slippages in the microfinance portfolio, especially in West Bengal (42% of EB book), could delay credit cost improvement.
बंधन बैंक की तीसरी तिमाही के नतीजे: - मुनाफा 206 करोड़ रुपये, पिछली तिमाही से 84% ज्यादा, लेकिन पिछले साल से 52% कम। - कमाई पर असर: एक बार का ग्रेच्युटी खर्च (120 करोड़) और बुरे कर्ज की बिक्री का खर्च। - कर्ज बढ़ोतरी: सालाना 10% बढ़कर 1.45 लाख करोड़ रुपये, जिसमें 57% सुरक्षित कर्ज। - ब्याज कमाई (NIM) 5.9% हुई, क्योंकि बैंक को सस्ता फंड मिला। - बुरे कर्ज (GNPA) घटकर 3.3% (पिछली तिमाही 5.1%), ARC को 3,165 करोड़ के कर्ज बेचे। - आगे: कर्ज घाटा 1.6-1.7% तक कम होने की उम्मीद, लेकिन अभी खर्च ज्यादा रहेगा। - खतरा: पश्चिम बंगाल में माइक्रोफाइनेंस कर्ज (42%) में गड़बड़ी से सुधार में देरी।
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Read Transcript →Quarter Snapshot
Gross NPA Ratio
3.3%
-180bps QoQ
Improved from 5.1% in Q2 FY26, driven by ARC sale of INR 3,165 crore NPAs.
EB Collection Efficiency (Dec)
98%
+50bps QoQ
Improved from 97.5% in Sep 2025; X-bucket collection at 99.6% in Nov-Dec.
Secured Book Share
57%
+4pp YoY
Up from 53% a year ago, reflecting diversification away from unsecured microfinance.
Retail Term Deposit Growth
36% YoY
+36pp YoY
Strong growth in granular deposits, supporting liability franchise improvement.
What Changed vs Last Quarter
NEW
Advances CAGR of 15-17% over 2-3 years
Management guided for 15-17% CAGR in advances, with deposit growth expected to be higher than loan growth.
NEW
EB book to show sequential growth
Management expects the microfinance portfolio to grow sequentially, with degrowth phase behind, supported by improving disbursements and collections.
UPDATED
Credit cost target of 1.6-1.7% by Q4 FY27
Management reiterated medium-term credit cost guidance of 1.6-1.7% overall and 2.5-3% for the EB segment by end of FY27.
UPDATED
NIM improvement from current levels
CFO expects NIM to improve from 5.9% due to cost of funds declining 35-50 bps over next 2-3 quarters, partly offset by repo rate cut impact of ~11 bps.
DROPPED
EEB growth to resume from Q3
EEB portfolio is expected to see gradual growth from Q3 onwards as operating environment shows signs of recovery.
DROPPED
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.
NEW RISK
West Bengal concentration in EB book
42% of the microfinance portfolio is in West Bengal, where SMA1 rose sharply due to holiday-related collection gaps; state elections could disrupt collections.
NEW RISK
CASA deposit erosion
CASA declined 4% YoY to INR 42,730 crore due to savings rate cuts; recovery to 31% ratio may take longer than expected.
NEW RISK
Housing loan asset quality deterioration
NPAs in the housing portfolio have been rising; management cited legacy underwriting issues and is implementing process changes, but impact may take time.
NEW RISK
Additional labor code provisions
INR 120 crore gratuity provision booked this quarter; further provisions may be needed as state-level rules are notified, but quantum is uncertain.
RISK GONE
Political debt waiver in Bihar
Opposition manifestos in Bihar elections propose debt waivers for SHGs, which could disrupt collections if implemented.
RISK GONE
Elevated EEB slippages persist
EEB slippages remained high at INR 1,118 crore, and management expects stress to continue for 1-2 more months.
RISK GONE
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.
RISK GONE
Slow EEB customer addition
Net new EEB customer addition has stagnated due to industry-wide ineligibility, limiting growth potential.
🤫 Topics management stopped discussing
Mentioned in Q1 FY25, Q1 FY26, Q2 FY25, Q2 FY26
Management expects EEB credit cost to settle at 2.5-3% by FY27 exit, with overall bank credit cost at 1.5-1.6%.
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 reiterated medium-term credit cost guidance of 1.6-1.7% overall and 2.5-3% for the EB segment by end of FY27.
42% of the microfinance portfolio is in West Bengal, where SMA1 rose sharply due to holiday-related collection gaps; state elections could disrupt...
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