Bandhan Bank Q2 FY27 Earnings Call — Analysis (NSE: BANDHANBNK)
Bandhan Bank reports a 5.5x YoY surge in Q2FY27 PAT to ₹622 Cr as microbanking portfolio stabilizes and asset mix shifts toward secured lending.
Result quality: strong — Earnings grew. Management sentiment: optimistic.
The take
Q2FY27 Net Interest Income ₹2960 Cr ( +14.4% YoY ) . New guidance — FY27 credit cost improvement 1.7% . New story: Portfolio Diversification & EEB Prudence .
Results
Net interest income rose 14.4% YoY to ₹2,960 Cr with NIM stable at 6.1%, while PAT expanded 5.5x YoY to ₹622 Cr with ROA improving to 1.2%.
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| Gross Advances | ₹158000 Cr | +13.1% | yoy · Q2FY27 |
| Total Deposits | ₹173000 Cr | +9.2% | yoy · Q2FY27 |
| CASA Deposits | ₹46132 Cr | +4.3% | yoy · Q2FY27 |
| Net Interest Income | ₹2960 Cr | +14.4% | yoy · Q2FY27 |
| Operating Profit | ₹1556 Cr | +18.8% | yoy · Q2FY27 |
| Profit After Tax | ₹622 Cr | +455.8% | yoy · Q2FY27 |
| Net Interest Margin | 6.1% | -10bps | sequential · Q2FY27 · vs 6.2% in Q1FY27 |
| Gross NPA | 3.1% | point_in_time · Q2FY27 · Sep-26 | |
| Net NPA | 0.9% | point_in_time · Q2FY27 · Sep-26 | |
| Credit Cost | 1.8% | +0bps | sequential · Q2FY27 |
| Return on Assets | 1.2% | +100bps | yoy · Q2FY27 |
| Capital Adequacy Ratio | 18.3% | point_in_time · Q2FY27 · Sep-26 |
Guidance
Management maintained full-year loan growth target of ~14%, guided Q4 exit ROA of 1.2%–1.4%, and reiterated opex-to-assets at 4.2%.
What management committed to
- Going into Q3 and Q4, despite the external factors, we are hopeful of achieving targeted growth of around 8%–10% [in the EEB/MFI portfolio]. — 8%-10%, H2FY27
- Full-year PSLC cost will be around INR 120 crore. The cost will come down substantially this year, be almost neutralised or close to zero next year [FY28], and thereafter we will not need to purchase PSLCs. — FY27 ~INR 120 cr; FY28 ~0, FY28
- We expect some improvement in credit cost, potentially from 1.8% to 1.7% [for the remainder of FY27]. — 1.7%, FY27
- [Housing business] should perform much better... From Q4 [FY27], we expect a better trajectory and good growth in this segment. — better trajectory and good growth, Q4FY27
Key themes
EEB stabilization and portfolio diversification
How the narrative shifted
- Portfolio Diversification & EEB Prudence: The bank positions its deliberate shift away from EEB dominance and towards a balanced one-third mix across wholesale, secured retail, and EEB as a key achievement that de-risks the franchise and supports sustainable growth.
- Granular Deposit Mobilization & Liability Strength: Management emphasizes accelerating granular retail deposit growth as the primary engine for funding, accepting short-term savings account moderation from rate recalibration as a necessary investment in deposit quality and stability.
- Asset Quality & EEB Stabilization: A prior concern (EEB degrowth / stress) is reframed as a success story of stabilization and controlled recovery.
- Operating Efficiency & Cost Discipline: The bank reaffirms its opex-to-assets target at 4.2%, citing platform rationalization savings and disciplined spend while maintaining technology investments.
- Bancassurance & Fee Income Headwinds: Explicitly framed as manageable, with mitigation levers (MF, cards, FX) emphasized to reduce perceived impact.
- Housing Franchise Restructuring: Past underperformance is reframed as a temporary cost of necessary structural upgrades.
Operational commentary
- Launched universal credit card business across four variants (Sparks, Ignite, Flare, Lumina) to target Gen Z, affluent, and corporate salary accounts.
- EEB (Emerging Entrepreneurs Business) de-growth arrested; portfolio stabilized at ₹52,616 Cr (+1.7% YoY) with collection efficiency improving to 99.3%.
- Secured book expanded to 57.3% of total advances from 54.9% a year ago, led by retail assets (+41.9% YoY) and wholesale banking (+31.6% YoY).
- Restructuring and verticalization in housing finance completed; centers converted into branches with separation of onboarding, underwriting, and operations.
- Substituted ₹3,400 Cr of high-cost borrowings with short-tenure bulk deposits to manage funding costs and liquidity.
- Replaced major IT platform delivering operational savings of ~₹50 Cr annually (~₹12 Cr per quarter).
Analyst Q&A
Q. What is the expected SA attrition and impact on NIMs after savings rate cut?
CASA was partly impacted by the timing of West Bengal Annapurna scheme flows; NIM expected to remain stable within 6.1%–6.2% supported by active borrowing-to-bulk deposit substitution.
Q. Will the draft bancassurance commission caps cause a 60% hit to fee income?
Detailed study not yet completed, but Bank's retail semi-urban/rural mix and non-credit-linked structure plus expansion into mutual funds, trade, and cards should mitigate the impact.
Q. Why did Day-1 ECL estimates rise to ₹2,200 Cr from ₹1,200-1,300 Cr earlier?
The ₹1,250 Cr figure was an initial calculation 3-4 quarters ago based on draft norms; current ₹2,200 Cr is based on March 2026 data and should improve as DPD pools decline.
Q. When will retail asset businesses reach break-even profitability?
Retail businesses were started two years ago and are scaling up; expected to achieve positive ROA within the next 2 to 3 quarters.
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