Bandhan Bank Q1 Net Profit Up 35% At ₹502 Cr; Shares Down 15% After Guidance Cut

Bandhan Bank’s first quarter of FY27 saw a meaningful improvement in bottom-line performance with net profit rising about 35% YoY to ₹501.67 crore from ₹371.96 crore a year ago.

The key driver was a sharp 40.5% reduction in provisions and contingencies to ₹682.59 crore from ₹1,146.91 crore in Q1 FY26, reflecting improved asset quality across the portfolio.

Despite the profit growth, Bandhan Bank's shares fell as much as 15% on 22 July 26 after management cut its return on assets guidance and flagged continued margin pressure. At 10:38 am, the shares were trading down 15% at ₹177.5 on the National Stock Exchange.

Bandhan Bank: Revenue And Cost Pressures

Net interest income grew 5.92% year-on-year to ₹2,920.58 crore, while non-interest income fell 16.81% to ₹603.83 crore. Operating profit declined 18.59% to ₹1,358.10 crore, weighed down by a sharp rise in operating expenses.

Expenses grew approximately 19% year-on-year, driven by higher employee costs following the new labour codes and increased technology procurement costs linked to the West Asia crisis. Net interest margin stood at 6.2%, a decline of 16 basis points year-on-year.

Asset Quality Improves

The asset quality picture was encouraging. Gross non-performing assets in absolute terms fell around 26% year-on-year to ₹4,880.95 crore from ₹6,622.64 crore. The gross NPA ratio declined 181 basis points to 3.15%, while the net NPA ratio fell 43 basis points to 0.93%. Fresh slippages came down sharply to approximately ₹630 crore from around ₹1,230 crore in Q1 FY26.

Gross advances grew 16% year-on-year, while deposits rose 7%. The bank's microfinance book, now referred to as the EEB segment, saw a marginal decline compared to the same period last year.

Management Outlook And Guidance Cut

In its post-results call, management described the quarter as demonstrating significantly better resilience compared to the prior year, traditionally the softest period for the bank. However, the bank cut its exit return on assets guidance to 1.2% to 1.4% from the earlier range of 1.6% to 1.8%, a move that weighed heavily on the stock.

Management flagged deposit pricing, an uncertain global environment, monsoon risks and higher technology costs as key headwinds. The bank has also kept open the securitisation route to manage the gap between credit and deposit growth. On the FCNR(B) front, around ₹30 crore has been mobilised so far under the scheme, with management expecting significantly higher inflows over the next two months.

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