Bandhan Bank Shares Tumble as Lender Downgrades Outlook Over Narrowing Margins and Higher Costs

Bandhan Bank Shares Tumble as Lender Downgrades Outlook Over Narrowing Margins and Higher Costs​

Bandhan Bank shares plunged 14% at ₹179.73 on Tuesday, despite reporting a strong year-on-year increase in net profit for the first quarter of FY27. The stock reacted negatively after the Kolkata-based lender cut its fiscal year return-on-assets (RoA) outlook due to expectations of narrower net interest margins and rising operating expenses.

The bank's Managing Director and Chief Executive Officer, Partha Pratim Sengupta, stated during an analyst conference call that the reduced aspiration for RoA was linked to external factors currently being faced by the institution. He noted that while the medium-term strategic objectives remain unchanged, achieving the targeted level of RoA might extend beyond the originally planned timeline due to the prevailing external environment.

##Q1 FY27 Profit and Income Highlights

Bandhan Bank Ltd reported a significant 35% year-on-year rise in its net profit, amounting to ₹502 crore for the first quarter of the financial year 2026-27. This performance contrasts sharply with the corresponding period last fiscal year when the net profit stood at ₹372 crore.

Gross advances grew by 16.4% on a year-on-year basis, reaching ₹1,55,555 crore as of June 2026, up from ₹1,33,625 crore reported one year earlier. The lender also noted that the retail book (excluding housing) saw a strong growth of 45% year-on-year, while wholesale banking rose by 38%.

Net interest income (NII) for the April-June period grew 5.9%, climbing to ₹2,921 crore from ₹2,757 crore in the same period last year. Furthermore, net total income saw a modest rise of 1.2% to ₹3,524 crore, compared to ₹3,483 crore in the preceding year.

##Asset Quality and Capital Metrics

The bank demonstrated sequential improvements in asset quality metrics for the quarter. Gross non-performing assets (NPA) stood at 3.1%, while net NPA was reported at 0.9%. These figures show improvement compared to the preceding three-month period of 3.3% gross and 1% net NPA.

On a year-on-year basis, the lender managed to improve gross NPA by 182 basis points and net NPA by 43 basis points. The bank’s provision coverage ratio, including technical write-offs, was recorded at 85.9% as of June 30, 2026.

Capital adequacy for Bandhan Bank stood at 18.2%, a marginal decline from the previous year's figure of 19.4%. For the quarter, return on assets (RoA) was measured at 1%, with return on equity (ROE) posted at 7.7%.

##Management and Future Focus

The deviation in the RoA from earlier guidance was attributed by Sengupta to external uncertainties which have led to higher funding costs and increased technology-related expenses, both of which began impacting profitability immediately. The bank's performance reflects the resilience and commitment of its teams, as stated by Partha Pratim Sengupta.

Moving forward, the institution remains committed to customer-centric growth, focusing on strengthening its distribution network and expanding its diverse product offerings. Additionally, the board approved the appointment of Vinay Jain as interim chief financial officer, effective September 26, 2026, until March 31, 2027, following the resignation of Rajeev Mantri.