Bandhan Bank reported a 35% profit rise to ₹502 crore for Q1 FY27, supported by a 40% reduction in bad loan provisions. While advances grew by 16.4%, the bank is adjusting its strategy to address slower deposit growth.
Detailed Coverage
Bandhan Bank announced its financial results for the first quarter ending June 30, 2026, reporting a net profit of ₹502 crore. This 35 percent year-on-year increase was largely driven by a significant reduction in provisions, which dropped to ₹680 crore from ₹1,150 crore in the same period last year. Provisions are funds set aside by a bank to cover potential losses from bad loans, and a decrease in this figure directly boosts the bottom line.
Asset Quality and Loan Portfolio
The bank showed improvement in its asset quality metrics during the quarter. The gross non-performing asset (NPA) ratio, which measures the percentage of bad loans, declined sequentially by 12 basis points to 3.1 percent. Similarly, the net NPA ratio improved by 4 basis points to 0.9 percent. These figures indicate that the bank's credit management process has become more effective, potentially reducing future risks.
The lender's advances grew by 16.4 percent year-on-year, reaching ₹1.55 trillion. This growth was fueled by strong demand in the retail and wholesale segments, which expanded by 45 percent and 38 percent, respectively. In contrast, the housing loan book grew at a slower pace of 6 percent, and the microfinance portfolio saw a marginal dip, totaling ₹52,641 crore compared to ₹52,812 crore in the previous year.
Strategic Shifts in Funding
While the bank's lending business remains active, deposit growth has lagged, rising only 6.6 percent to ₹1.64 trillion. This creates a liquidity challenge, as banks require a steady flow of low-cost deposits to fund their lending activities. To manage this, the bank has reduced its dependence on expensive, volatile bulk deposits, which fell by 12.7 percent year-on-year, while focusing on a 16 percent increase in more stable retail deposits.
Management, led by CEO Partha Pratim Dasgupta, acknowledged the industry-wide challenge of attracting household savings. In response, the bank is looking toward alternative funding strategies, such as market borrowings and the securitization of loan assets, where the bank sells a pool of its loans to other investors to free up cash. Additionally, the bank has initiated the FCNR(B) deposit scheme, a foreign currency deposit option for non-resident Indians, to broaden its funding base. Investors will likely track whether these funding efforts succeed in narrowing the gap between loan growth and deposit mobilization in upcoming quarters.