BANDHANBNK - Bandhan Bank Limited Share Price

During the Q4FY26 earnings call, management conveyed a positive outlook for Bandhan Bank, highlighting several key performance indicators and forward-looking strategies:

1. Loan Growth: Gross advances reached approximately INR 1.54 lakh crores, reflecting a 13% year-on-year growth, with the non-EEB (External Commercial Borrowing) segments expanding by 25% YoY. The secured lending share remains stable at nearly 56% of the overall portfolio, aligning with the bank's strategy to bolster its secured book.

2. Deposits: Total deposits stood at INR 1.66 lakh crores, marking a 10% increase YoY. Retail term deposits grew robustly at over 30% YoY, and CASA (Current Account Savings Account) deposits accounted for 29% of total deposits, indicating improved granularity and quality in the bank's funding base.

3. Net Interest Margin (NIM): NIMs improved to 6.2% from 5.9% in Q3, supported by a reduction in funding costs and enhanced yield on advances. The management anticipates an additional 10 to 20 basis points improvement in subsequent quarters.

4. Asset Quality: Gross and net NPA (Non-Performing Assets) ratios stood at 3.3% and 1.0%, respectively, with a provision coverage ratio of 85% including technical write-offs. Recoveries and upgrades amounted to INR 360 crores during the quarter, further stabilizing asset quality.

5. Projected Return on Assets (ROA): Management aims for a ROA of approximately 1.6% to 1.7% by the end of FY27, underpinned by improved credit costs"”projected to decrease from the current 2% to around 1.6% to 1.7%"”and sustained growth in other income streams.

6. Capital Position: The bank maintains a robust capital adequacy ratio at 18.0%, with Tier 1 capital at 17.3%, providing ample capacity for future growth.

7. Dividend Declaration: The board recommended a dividend of INR 1.50 per share, reflecting confidence in the bank's financial health.

In summary, the management expressed optimism about maintaining growth momentum, enhancing credit quality, and increasing operational efficiency, which they believe will position Bandhan Bank for sustainable long-term performance.

Here are the major Q&A highlights from the earnings call:

1. Question: "What led to the strong average CA growth this quarter?" Answer: We focused on the current account affluent segment, improving month-on-month growth without significant seasonality. Our staff also effectively mobilized deposits through various trust accounts.

2. Question: "How do we plan to neutralize our PSL shortfall?" Answer: We've revamped our credit process, targeting a 50% reduction in PSL costs this year, ultimately aiming for zero shortfall. We're focusing on direct agriculture loans and improving the PSL qualification of EEB loans.

3. Question: "What is the vehicle business's customer profile and cross-sell rate?" Answer: Our vehicle loans include both 2-wheelers and cars, primarily serving salaried customers. Current cross-sell volume stands at about 20%, with a significant portion coming from existing branch customers.

4. Question: "Can you quantify the one-off items in operating expenses?" Answer: We incurred roughly INR 120 crores in non-recurring items this quarter, including INR 60 crores in PSLC costs and similar amounts in IT expenditures. These are not expected to recur consistently.

5. Question: "What is the outlook for ROA in FY27?" Answer: We expect to improve ROA gradually towards 1.6% to 1.7% by the end of FY27. This goal is supported by credit cost reductions and improved NIMs, contingent on stable economic conditions.

6. Question: "How do you assess collection efficiency post-elections?" Answer: Collections remain stable, with slight, expected seasonal variations in April. We do not foresee any adverse effects from the elections or external events at this time.

7. Question: "What is your credit cost guidance for FY27?" Answer: We anticipate a credit cost guidance in the range of 1.6% to 1.7% for the end of FY27, considering current trends and improvements in the portfolio.

8. Question: "How do you address employee cost increases?" Answer: This quarter's employee costs rose due to extra working days for holiday coverage, with INR 73 crores incurred. The increases were not related to previously mentioned labor code impacts.

9. Question: "What strategy do you employ regarding secured vs. unsecured lending?" Answer: We target a 58% secured and 42% unsecured book by FY27. We believe this approach will not materially impact NIMs, as our focus on secured lending aims to maintain overall profitability.

10. Question: "What is the status of government-related deposits in your portfolio?"

Answer: Government-related deposits constitute about INR 6,000 crores, approximately 12% of our CASA deposits. We've intentionally reduced reliance on bulk deposits, enhancing our stability and deposit structure.

These questions and answers provide a comprehensive overview of Bandhan Bank's operational strategies, financial performance, and future outlook.