New Delhi: Bandhan Bank kicked off FY26 on a challenging note, reporting a sharp 65% year-on-year drop in net profit. The lender posted a net profit of ₹372 crore for Q1 FY26, down from ₹1,063 crore in the same quarter last year.
While the bank’s total income for the quarter inched up slightly to ₹6,201.49 crore (vs ₹6,081.73 crore in Q1 FY25), the real hit came from the asset side. Rising provisions and higher credit costs, mainly due to stress in the microfinance segment and slippages in the eastern region, significantly dented the bottom line.
Net Interest Income and Profitability Under Pressure
A notable decline was seen in the Net Interest Income (NII), which dropped 8% YoY to ₹2,748 crore from ₹2,987 crore. This, coupled with elevated provisioning, weakened profitability further. The Net Interest Margin (NIM) for the quarter came in at 6.4%, reflecting stress on the core lending business.
Bandhan Bank’s operating profit also took a hit, falling to ₹1,668 crore from ₹1,941 crore in Q1 FY25. The bank had to set aside ₹1,147 crore towards provisions and contingencies more than double the ₹523 crore allocated in the year-ago period.
Asset Quality Deteriorates
Asset quality remained a major concern. The gross non-performing assets (GNPA) ratio worsened to 5.0% in Q1 FY26, up from 4.2% in the same quarter last year. Net NPA stood at 1.4%, rising from 1.1% in Q1 FY25.
Management noted that the pressures were mainly due to continued stress in the microfinance loan book, especially in the East. As a result, the bank is focusing on improving its collection efficiency and tightening underwriting norms.
Capital & Business Metrics Hold Steady
On the brighter side, the bank’s capital adequacy ratio remained strong at 19.4% as of June 30, 2025 well above the regulatory requirement of 11.5%. The total assets stood at ₹1,89,403 crore, while the Return on Assets (RoA) was 0.20% for the quarter.
In terms of business growth, total deposits rose 16% YoY to ₹1.55 lakh crore. Retail deposits (CASA + retail term deposits) made up 68% of the total, showcasing a healthy retail focus. CASA deposits stood at ₹41,858 crore, while retail term deposits surged 34% YoY to ₹63,661 crore.
Gross advances increased 6% YoY to ₹1.34 lakh crore. Importantly, the share of secured loans in the total portfolio rose to over 52%, up from 43% a year ago a positive sign for asset quality stability going forward.
CEO’s Statement
Partha Pratim Sengupta, Managing Director and CEO of Bandhan Bank, said,
“While the operating environment poses certain challenges, our performance reflects the underlying resilience of our business and the strength of our strategic direction. We remain focused on prudent risk management, operational efficiency, and delivering long-term value for our customers and stakeholders.”