BANDHANBNKNSEQ1FY26July 25, 2025

Bandhan Bank Limited

11,653words
109turns
13analyst exchanges
5executives
Management on call
Partha Pratim Sengupta
- MANAGING
Ratan Kumar Kesh
EXECUTIVE DIRECTOR
Rajinder Kumar Babbar
EXECUTIVE
Rajeev Mantri
CHIEF FINANCIAL OFFICER – BANDHAN BANK LIMITED
Vikash Mundhra
HEAD, INVESTOR
Key numbers — 40 extracted
6.5%
asures. For fiscal year 2025-26 the Reserve Bank of India has projected a real GDP growth rate of 6.5% alongside a moderate average CPI inflation of 3.7%, reflecting a balanced and stable economic out
3.7%
India has projected a real GDP growth rate of 6.5% alongside a moderate average CPI inflation of 3.7%, reflecting a balanced and stable economic outlook. In line with its commitment to fostering grow
100 basis point
nt reduction in the repo rate in June 2025. The cumulative cut since early February 2025 has been 100 basis points. Furthermore, the RBI has announced a phased reduction in the CRR by 100 basis points to be impl
INR 1.34 lakh crore
ndicators from the first quarter of FY26. As of June 30, 2025, the Bank’s gross advances stood at INR 1.34 lakh crores, registering a year- on-year growth of 6%. On the liabilities side, total deposits reached INR 1.
6%
25, the Bank’s gross advances stood at INR 1.34 lakh crores, registering a year- on-year growth of 6%. On the liabilities side, total deposits reached INR 1.55 lakh crores, reflecting a robust YoY gr
INR 1.55 lakh crore
crores, registering a year- on-year growth of 6%. On the liabilities side, total deposits reached INR 1.55 lakh crores, reflecting a robust YoY growth of 16%, significantly outpacing the growth in advances. This
16%
liabilities side, total deposits reached INR 1.55 lakh crores, reflecting a robust YoY growth of 16%, significantly outpacing the growth in advances. This reflects our strategic focu
34%
healthy balance sheet composition. Retail term deposits demonstrated strong momentum, growing by 34% YoY. This performance underscores the increasing trust and engagement of individual customers and
27%
omers and highlights the effectiveness of our distribution network. CASA deposits now account for 27% of our total deposit base. The overall share of retail deposits (CASA + Retail Term Deposits) rem
68%
eposit base. The overall share of retail deposits (CASA + Retail Term Deposits) remains steady at 68%, indicating a marked improvement in both the granularity and stability of our deposit base. We
29%
tion strategy with steady progress. During the quarter, our secured book recorded a YoY growth of 29%, resulting in an improvement in the secured portfolio mix to 52%, compared to 43% a year ago. M
52%
ed book recorded a YoY growth of 29%, resulting in an improvement in the secured portfolio mix to 52%, compared to 43% a year ago. Maintaining asset quality remains a top priority. Credit costs saw a
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Guidance — 20 items
Vikash Mundra
opening
“The combination of moderating inflation, a generally favourable monsoon forecast, and the introduction of the new income tax regime is expected to collectively foster a positive business environment and bolster confidence in a broad-based recovery across sectors.”
Vikash Mundra
opening
“Further, as highlighted in our previous communications, we anticipate challenges in the EEB segment to persist until the second quarter of FY26, albeit on an improving trajectory.”
Vikash Mundra
opening
“Recent regulatory and monetary interventions such as reduction in RWA for lending to MFI and NBFC-MFI as well as PSL related relaxations, have been constructive for the sector, and we expect to witness a gradual and steady recovery in the EEB segment over the coming months, with a positive bias emerging in the second half of the fiscal year.”
Vikash Mundra
opening
“In line with our guidance, we saw marginal improvement in slippages compared to the previous quarter, reflecting our continued emphasis on prudent asset quality management.”
Vikash Mundra
opening
“Rajeev Mantri, will provide a comprehensive overview of the financials, I would like to take this opportunity to highlight a few key developments and performance indicators from the first quarter of FY26.”
Vikash Mundra
opening
“In the first quarter of FY26, the Bank undertook strategic measures to reduce the cost of deposits by lowering interest rates on both savings and term deposit accounts.”
Rajeev Mantri
opening
“During the first quarter of FY26, the non-interest income grew by 33% YoY.”
Kunal Shah
qa
“So in fact, it seems like after maybe 12 months kind of a vintage, we still see 4% slipping into NPA across the pools, okay, right, from 3Q to maybe almost like Q1 of 3QFY24 to Q1 FY25.”
Vishal Wadhwa
qa
“So this particular year, if we have to compare it to the previous year, which we had in year FY25, our disbursals in Q1FY26 stood at 10,708 crores in EEB, and that number corresponding in Q1FY25 was 13,721.”
Vishal Wadhwa
qa
“So I foresee that this will -- some of will be in the range of 3% NPA, not in the range of 4.5%, 5%, in times to come.”
Risks & concerns — 15 flagged
We will remain focused on prudent risk management, identifying new avenues for growth, and further enhancing operational efficiency to drive sustained performance.
— Vikash Mundra
Emphasizing risk management, the Bank integrates advanced analytics at every stage of the customer lifecycle to ensure asset quality.
— Vikash Mundra
Overall, we remain committed to building long-term value through disciplined growth, strong risk management, and continued investment in our core capabilities.
— Vikash Mundra
This decline was mainly driven by the strategic controls we have implemented in response to the elevated sectoral risks.
— Rajeev Mantri
Notably, West Bengal remains the largest contributor at 22.8%, a slight decline from 24.1% in Q1FY25.
— Rajeev Mantri
CASA deposits stood at INR41,858 crores, marking a 12% QoQ decline.
— Rajeev Mantri
This decline was primarily driven by typical Q1 seasonality as well as industry trends.
— Rajeev Mantri
The marginal decline in collection efficiency is primarily attributable to a procedural change related to the raising of installment demand on holidays.
— Rajeev Mantri
The net interest income for the Q1FY26 stood at INR2,757 crores, reflecting a YoY decline of 8%.
— Rajeev Mantri
NIM for the quarter stood at 6.4%, a decline from 6.7% in Q4FY25.
— Rajeev Mantri
This moderation was primarily driven by an increased proportion of secured loans in the overall portfolio reduction in the CD ratio, the impact of the recent repo rate cut and the continued stretch from the elevated slippages.
— Rajeev Mantri
However, the decline in NIM was partially offset by an improvement in the cost of funds, which reduced by 19 basis points on a sequential basis in this quarter.
— Rajeev Mantri
As a result, our net total income for Q1FY26 stood at INR3,483 crores, representing a YoY decline of 1%.
— Rajeev Mantri
This rise primarily reflects our continued strategic investments in talent, technology and infrastructure as well as the impact of higher business volumes in our non-EEB segments.
— Rajeev Mantri
The operating expenses to average assets ratio for the quarter stood at 3.9%, marking a sequential decline of 23 basis points.
— Rajeev Mantri
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Q&A — 13 exchanges
Q
Yes. So firstly, with respect to disbursements, maybe of almost like INR10,000-odd crores, which is down. If you can highlight in terms of how much is on account of implementation of Guardrail 2.0 and how the rejection rates have moved? And any particular geographical trends, if you can just indicate that? And how much was because of maybe the conservative approach towards growing the EEB portfolio? So that's the first question. And second question, when we look at it in terms of the vintage analysis, which you provide on the disbursements, which is on Slide 21. So when we look at it, like eve
Vishal Wadhwa
This is Vishal here. I'll take your question. The first part of your question spoke about in terms of the EEB disbursals coming down. First quarter every year, there is a seasonality which gets the disbursal down. So this particular year, if we have to compare it to the previous year, which we had in year FY25, our disbursals in Q1FY26 stood at 10,708 crores in EEB, and that number corresponding in Q1FY25 was 13,721. So obviously, the disbursals moderated because of the guardrails, which got implemented and these guardrails are good in nature from a long-term perspective. But obviously, there
Q
Sir, first question is on your SMA-0, where I think you said that you started billing on the holidays and that's the reason the SMA portfolio has gone up. Can you explain like how is that happening and what is the industry practice? Secondly, your SMA-1 and 2 portfolio has actually gone up now. So what explains that market moment? Is it specifically states likes West Bengal or Assam or there is something more to it? Number one. Number two question is that when do you see your 5% of the Bandhan Plus 3 portfolio unwinding, whether it will take another about 6 months for that portfolio to unwind,
Vishal Wadhwa
Okay. I'll take this question again. In terms of our SMA going higher, this number has primarily happened because like what Rajeev was speaking about raising instalment demands on the holidays, which was a requirement to maintain the consistency amongst the products - demand on holiday was being raised from 31st of March. And then we had 4 days in the month of April, where we started raising demand on holidays. And that's why you see there is an elevation on SMA-0, which, however, is pretty much recoverable. That is not something which is so much for us to worry upon. If you see SMA-1 and 2 la
Q
Good evening. I had a couple of questions. Firstly, again, on the SMA-0. So given that these are very low income groups, there is a lot of certainty that it does not roll forward. Is that the right way to put it? Because they are low income, right? So -- I mean, usually, it's a difficult guess on whether they do roll forward or not. So that's my first question. And my -- should I -- okay, you can answer that later on...
Ratan Kumar Kesh
So we have got on the EEB segment where our data proves that our SMA-1 and 2 remains stable for us, while SMA-0 got slightly elevated in the same month itself, getting recovered. so collection efficiency has inched up you can see. So basically the holiday impact, actually the increase is that.. I'll just say that we have started these things, collecting also on the holidays where we cannot make any collection, but the demands are made. So obviously, in any geography, if you see there is a holiday and if my people are not there for collection, almost 1/6 of the portfolio in that particular geog
Q
Just a few follow-ups on MFI. Firstly, have you all or the industry hike MFI yields, yields and processing fees? Partha Pratim Sengupta: No. We have not hiked.
Rajeev Mantri
No yield hike, no processing fee hike. And no cut either? Partha Pratim Sengupta: No cuts there, and we have not hiked anything. Understood. And then secondly, on this holiday thing, can you just once again explain it, so let's say, there was a holiday on 10th April and she had to pay, but she couldn't pay, then what happens, say, on 11th don't you all go and collect it? Partha Pratim Sengupta: So let me tell that earlier what was happening on a holiday, the instalment demand was not being raised. But as you know, that we need to -- we, now being a bank, we need to comply with the consistency
Q
One very quick question, take 30 seconds. Just what's your trajectory on NIMs, if you can guide us? Partha Pratim Sengupta: So NIM will get moderated as we note that we have just passed with 25 basis points of repo rate cut. And now this quarter, we are passing another 75 basis points. But two good things out there. My only 50% of the advances will get affected because 50% - 52% of my books are still in the fixed rate. So that's advantage I'm getting positive. Number two is that my cost of fund, as I've told you, Rajeev has already told that sequentially because of the cut in the deposit rates
Rajeev Mantri
So four factors to think about, which will impact the NIMs. One is clearly the repo effect. So I think 45% of our book is repo linked and there, there could be some bit of impact. However, we have reduced our savings rate and we've seen the benefit of that come from this quarter already, 19 basis points improvement in the cost of deposits. And as the term deposits come for renewal, we will see benefit of that coming through in quarter 3, quarter 4. The third is on slippages. As slippages continue to come down, we should see a benefit or an offset happening on that particular front. And the fou
Q
Two questions. First on margins, as you just explained, if I look at the mix change on the asset side with more of secured and less of EEB, even in third and fourth quarter with the FD effect coming in, do we still get sequential reduction in margin? So second quarter, definitely margin goes down, if I understand you correctly. Does that continue in third and fourth quarter as well sequentially, that's first? Second, this increased competition of some of the players kind of gaining the gentlemen's code and competing a bit aggressively, which segments, which states do we see this behavior? Is t
Rajeev Mantri
Maybe I'll take the first one on the NIM. I think I've already talked about the key factors which are there. Look, I think you're right, we should -- we will be able to see, I think, some bit of a compression further in the next quarter. However, we should be able to see some level of stabilization in the second half of this year because of the offsets that we expect, especially in the slippages that should try to improve. So I think that is about trajectory that we are looking at from a NIMs perspective. But at the same time, there are other levers that we're looking at on how do we actually
Q
First, a small clarification, Vishal. So you said that -- now that the qualifying criteria has been changed. So there may be further tightness on the individual loan side, right, not the group EEB, but I mean in your parlance, the individual MFI loans, is that the understanding? Partha Pratim Sengupta: So what Vishal was just telling that, now NBFC-MFI can do 40% non-micro business. So there will be a little bit of aggression in the individual loans further like we have got a SBAL in our books. So similar to that such schemes are there. Now in this particular loan, there are no guardrails as o
Jai Mundhra
Correct. So I mean, honestly, if I understand, if I look at our EEB book, while at the system level, at the aggregate level for Bandhan, the EEB book has been declining, but still the individual portion is still reasonably healthy, right? So I mean there is some moderation you may -- if there is a further tightness there, right, then there could be one outcome there. So I would like to say that the individual loan book is gearing better than the overall group loan book even in our side. My only contention here was there are now qualification criteria for other entities being like you spoke abo
Q
I just wanted to understand that while our margins have declined 30 bps Q-o-Q, loan book has declined around 2.5% Q-o-Q. What explains the net interest income being flat on a Q-o-Q basis? That would be my first question.
Rajeev Mantri
Yes. I think as I mentioned earlier, we actually have some improvement in the cost of funds. So our actions relating to the reduction in the savings account rates have led to almost 19 basis points reduction in the cost of deposits. And I think that has been able to help us in terms of reducing the -- what we are seeing in the gross yield. The second thing is also sequentially seen the slippages come down marginally from roughly INR1,700-odd crores to about INR1,540 crores the exact number. So from INR1,748 crores to INR1,553 crores and that lower slippages also translates into some benefit. I
Q
Just two questions on the EEB asset quality front. So when I was looking at your vintage book, I was surprised that in Q4FY25, I'm just seeing where you have given a disbursement of 151 billion. And it shows like an NPA of 0.1%. Now I know it's negligible 0.1% but I just don't understand that it's something that is disbursed in Q4FY25? And if he is not paying three instalments, that just makes it like immediately NPA after disbursement. How -- I know 0.1% is negligible, but just one clarity on that. Is it a collection issue or what is that? Because it seems like just -- like it's disbursed Q4F
Rajeev Mantri
I think your point is that it. It's largely due to some cross linkage and the NPA becoming due to that which is what is causing this. It's a fairly marginal aspect, and that's the deal something that's they are focusing in terms of recurring as well. There are Jan loans also here because it is JFM, So Jan-, we have a 12-month tenure, loan for 50% of our loans. So 6 months have elapsed from Jan. So point one, some portion would also be from a January month loan could be. And like what Rajeev said, most of it is coming primarily from a cross-linkage loans. Sorry, cross-linkage, I didn't get that
Q
Your investment yields seem to have increased on a sequential basis. What explains that?
Rajeev Mantri
Sorry, Manish, could you repeat that question? Your yield on investments have increased on a sequential basis. So despite your investment book declining on a sequential basis, there's a quite a bit of jump on investment income. So the calculated yield looks quite steep -- in a potentially declining interest rate environment. So can you please explain that? Sure -- so you see the surplus is in deposits because these are advance growth has been muted. So obviously, the funds have been deployed in investments, but investments also, we are building up the trading book mostly so if you look this qu
Q
No. I'm done.
Management
Q
So the first question is on the EEB disbursement that you are doing now, especially the group loan disbursements. Is it mostly to existing customers? Or are you looking for open market acquisition, new customer acquisition as well. So what is the strategy there?
Vishal Wadhwa
So we are doing both. It's not that only we are going to existing borrowers, 86%-87% is the existing borrowers and 13%-14% is coming from the new borrowers or whatever we have been disbursing. But like I said, guardrails are implemented for both set of borrowers. Sure, of course. But this 86%-87% is it now higher than, say, last couple of quarters? Or will it be coming lower? We have been doing 85% of existing borrowers typically and garner 15% from the new borrowers. The numbers remain pretty much similar. Okay. So -- and in the beginning of the call, I think you called out a few geographies
Q
Thank you. We would like to thank all of you to join for this call and would hope that you continue to place the trust with the bank. Thank you.
Management
Speaking time
Rajeev Mantri
22
Vishal Wadhwa
17
Moderator
15
Piran Engineer
6
Abhishek
6
Ratan Kumar Kesh
5
Jai Mundhra
5
Anand Dama
4
Mahrukh Adajania
4
Harsh Modi
4
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Opening remarks
Vikash Mundra
Thank you, Neerav. Good evening, everyone, and a warm welcome to all the participants. It's a pleasure to have you with us today as we discuss Bandhan Bank's business and financial performance for the quarter ending June 2025. We sincerely appreciate your time and participation. Today, we will take this opportunity to provide insights into our operational activities, significant achievements and challenges as well as offer perspectives on market conditions, strategic initiatives and any notable changes in our business environment. To walk you through these details, we are joined by Mr. Partha Pratim Sengupta, Managing Director and CEO; Mr. Ratan Kumar Kesh, Executive Director and Chief Operating Officer; Mr. Rajinder Kumar Babbar, Executive Director and Chief Business Officer; Mr. Rajeev Mantri, Chief Financial Officer; myself, Vikash Mundra, Head of Investor Relations; and our senior management team at Bandhan Bank. We are happy to answer any questions or provide additional clarity on
Rajeev Mantri
Thank you, Sengupta sir, and welcome, everyone, to the earnings call. We'll now move on to the business performance for the quarter. I will walk you through the key financial highlights and provide an overview of how the bank has performed. We'll start with the advances. As of June 2025, the gross advances stood at INR1.34 lakh crores, reflecting a growth of 6.4% YoY and on a sequential basis, the gross advances declined by 2.5%, primarily due to a 7% contraction in our EEB portfolio. The EEB portfolio declined by about 15% YoY, reaching INR52,812 crores. This decline was mainly driven by the strategic controls we have implemented in response to the elevated sectoral risks. On the other hand, the non-EEB portfolio, which now accounts for nearly 60% of total advances, up from 59% in the previous quarter and 51% a year back, registered a robust growth of 27% YoY. This strong performance was driven by continued momentum across our retail assets, wholesale banking and housing segments. Spe
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