Bandhan Bank drops after management cuts RoA guidance, flags margin pressure

Bandhan Bank tumbled 13.78% to Rs 180.05 on 22 July 2026 after the lender lowered its FY27 exit return on assets (RoA) guidance and warned of sustained pressure on margins.

In its post-earnings conference call, the bank revised its FY27 exit RoA guidance to 1.2%-1.4% from 1.6%-1.8% earlier. Management also said net interest margins are likely to remain under pressure due to higher deposit costs. It identified aggressive deposit pricing, an uncertain global environment, monsoon-related risks, and higher technology spending as key challenges going forward.

The cautious outlook prompted a domestic brokerage to downgrade the stock to 'Hold' from 'Buy', while retaining its target price of Rs 225. The brokerage also cut its FY27 and FY28 earnings estimates by 14% and 6%, respectively, and now expects the bank to deliver RoA of 1% in FY27 and 1.4% in FY28.

For the quarter ended 30 June 2026, the bank reported a standalone net profit of Rs 501.67 crore, up 34.9% from Rs 371.96 crore a year earlier but down 6.1% from Rs 534.14 crore in the previous quarter.

Net interest income rose 5.9% YoY to Rs 2,921 crore, while net revenue increased 1.2% YoY to Rs 3,524 crore. Net interest margin (NIM) stood at 6.2% in Q1 FY27, down 16 basis points YoY but up 2 basis points sequentially.

Total income rose 0.5% YoY and 0.6% QoQ to Rs 6,234.38 crore.

Operating profit before provisions and contingencies fell 18.6% YoY and 5.8% QoQ to Rs 1,358.10 crore.

Profit before tax stood at Rs 675.52 crore, up 29.5% YoY but down 11.6% QoQ.

The bank's provisions and contingencies declined 40.5% YoY to Rs 682.59 crore, although they were marginally higher than the Rs 677.01 crore reported in the March quarter.

Gross advances increased 16.4% YoY to Rs 1,55,555 crore, while deposits rose 6.6% YoY to Rs 1,64,886 crore as of 30 June 2026. Retail deposits, comprising CASA and retail term deposits, accounted for 74% of total deposits, while secured advances grew 27% YoY and constituted nearly 57% of the loan book.

Asset quality improved during the quarter. Gross NPAs declined to Rs 4,880.95 crore, with the gross NPA ratio improving to 3.15% from 3.27% in the previous quarter and 4.96% a year ago. Net NPAs stood at Rs 1,411.63 crore, while the net NPA ratio eased to 0.93% from 0.97% in Q4 FY26 and 1.36% in Q1 FY26. The provision coverage ratio, including technical write-offs, stood at 85.9%, while collection efficiency for Emerging Entrepreneurs Business (EEB) loans remained at 98.5%.

Commenting on the results, managing director and CEO Partha Pratim Sengupta said the bank remains focused on customer-centric and digitally enabled growth by strengthening its distribution network, expanding product offerings, and leveraging data-driven insights to deliver sustainable long-term growth.

Bandhan Bank started operations as a universal bank on 23 August 2015. It currently operates nearly 6,400 banking outlets across 35 of India's 36 states and union territories and serves around 3.2 crore customers.

Powered by Capital Market - Live News