BANDHANBNK - Bandhan Bank Limited Share Price

Management's outlook reflects cautious optimism despite ongoing challenges, particularly in the EEB segment, which they expect to improve gradually. For the fiscal year 2025-26, the Reserve Bank of India projects a real GDP growth rate of 6.5% with a moderate inflation rate of 3.7%. The bank anticipates that regulatory and monetary interventions will stimulate economic activity, particularly benefiting sectors like housing and MSMEs.

Key highlights include:

• As of June 30, 2025, Bandhan Bank's gross advances were INR 1.34 lakh crores, showing a 6% year-on-year growth.
• Total deposits reached INR 1.55 lakh crores, marking a robust 16% year-on-year growth, with retail term deposits growing by 34%.
• The proportion of secured loans within the total portfolio improved to 52%, from 43% a year prior.
• Gross NPA stood at 5%, with net NPA at 1.4%, and a provision coverage ratio of 87.3%.
• The bank reported a net profit of INR 372 crores for Q1FY26, a decline compared to INR 1,063 crores in Q1FY25, primarily due to changes in the advances mix and higher provisions.

Looking ahead, management emphasizes their focus on prudent risk management, ongoing investments in core capabilities, and improving operational efficiency. They expect EEB disbursements to recover in the latter half of the fiscal year, while maintaining a cautious approach towards growth in the portfolio, aiming for overall growth of 5% to 8% in EEB and over 15% in non-EEB sectors.

Here are the major questions from the Q&A section of the Bandhan Bank Q1 FY26 earnings call transcript, followed by detailed answers:

Question 1: "Can you highlight in terms of EEB disbursements, how much is on account of implementation of Guardrail 2.0 and how the rejection rates have moved?"

Answer: "Our EEB disbursements decreased to INR 10,708 crores in Q1FY26 from INR 13,721 crores in Q1FY25. The moderation is due to Guardrail 2.0, which has raised our rejection rates to about 16%-18%. Many loans from customers now with 60+ DPD aren't being considered for disbursement, affecting our growth."

Question 2: "On SMA-0, can you explain why it has increased and how this relates to the industry practice?"

Answer: "SMA-0 rose largely because we started billing on holidays, causing a backlog in collections. While these customers are part of low-income groups, we expect timely recoveries. Historical practices have changed; now, we aim to collect in advance to mitigate increases during festive seasons."

Question 3: "When do you see the unwinding of the 5% of your Bandhan Plus 3 portfolio?"

Answer: "Over the next 2-3 quarters, we expect this to drop below 3%. Currently, we're not onboarding new Bandhan Plus 3 loans, which helps in reducing this percentage."

Question 4: "What is your guidance on NIMs going forward?"

Answer: "NIM will likely moderate due to recent repo rate cuts. Around 50% of our advances are still fixed-rate, providing some stability. Overall, we expect a more significant change in NIMs in Q3 due to improved secured loans and potentially lower slippages."

Question 5: "With respect to asset quality, can you explain any changes in your approach?"

Answer: "Our credit cost guidance remains at 2.5%. We witnessed a sequential improvement in Q1 due to lower slippages. As we move forward, we aim for further reductions in credit cost, supported by improved asset recovery processes."

The answers detail the strategic positioning and outlook of Bandhan Bank while addressing specific operational aspects relevant to the financial situation in Q1 FY26.