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What the record says.
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.
Colored figures show movement against the previous available record.
Guidance to track
- 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.
- Management guided for 15-17% CAGR in advances, with deposit growth expected to be higher than loan growth.
- 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.
- Management expects the microfinance portfolio to grow sequentially, with degrowth phase behind, supported by improving disbursements and collections.
Risks flagged
- 42% of the microfinance portfolio is in West Bengal, where SMA1 rose sharply due to holiday-related collection gaps; state elections could disrupt collections.
- CASA declined 4% YoY to INR 42,730 crore due to savings rate cuts; recovery to 31% ratio may take longer than expected.
- NPAs in the housing portfolio have been rising; management cited legacy underwriting issues and is implementing process changes, but impact may take time.
- INR 120 crore gratuity provision booked this quarter; further provisions may be needed as state-level rules are notified, but quantum is uncertain.
Key quotes
- We have seen the bottom of the nadir in the month of September when our profits went to a dip of INR 112 crore. I can say that now going on forward with this balanced book of positions, along with the lot many risk mitigation measures that we have taken, I can share that we are now having a wholesale banking group share of almost 31%.
- We are confident that in Q2, we saw a bottom of the NIMs, at least for this financial year, and therefore some further improvement should be expected from these levels.
- Our guidance factor is at the end of FY 2027. We are still hopeful that we will probably be achieving it by the end of FY 2027. As you look at it, we've given a guidance of 1.6%-1.7% as at the end of FY 2027.
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