Summary
Bandhan Bank Limited - Q3 FY26 Earnings Call Summary Thursday, January 22, 2026 5:30 PM IST
Event Participants
Executives 5 Partha Pratim Sengupta (MD & CEO), Rajeev Mantri (CFO), Rajinder Kumar Babbar (ED & CBO), Ratan Kumar Kesh (ED & COO), Vikash Mundhra (Head of IR)
Analysts 6 Anand Dama, Anish Rai, Ankit Bihani, Jai Mundhra, MB Mahesh, Piran Engineer
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Deposits | ₹1.57 lakh crores | +11% YoY; growth driven by retail term deposits (+36% YoY) despite a 6% QoQ decline in bulk deposits. |
| Gross Advances | ₹1.45 lakh crores | +10% YoY; adjusted for ARC sale, underlying growth was 12% YoY and 6% QoQ. |
| CASA | ₹42,730 crores | -4% YoY; CASA ratio at 27% due to savings rate reductions and outflow of rate-sensitive high-value balances. |
| GNPA | 3.3% | Improved from 5.1% QoQ; primary driver was the sale of ₹3,165 crores in NPAs to ARCs. |
| NNPA | 1.0% | Improved from 1.4% QoQ; reflects disciplined resolution and provisioning strategy. |
| PCR | 84.3% | Includes technical write-offs; effective PCR including Security Receipts stands at 74.2%. |
| NIM | 5.9% | +10 bps QoQ; sequential improvement aided by a 20 bps reduction in cost of deposits. |
| Credit Cost | 3.3% | Moderated from 3.4% QoQ; management expects significant improvement toward medium-term targets. |
| PAT | ₹206 crores | -52% YoY; impacted by ₹120 crores labor code provision and costs associated with NPA cleansing. |
| CRAR | 17.8% | Robust capital position with Tier I at 17.0%, providing headroom for future growth. |
Geographic & Segment Commentary
- Emerging Entrepreneurs Business (EEB): The portfolio stood at ₹50,076 crores, showing a 2% QoQ growth when normalized for the ARC sale. Management noted “green shoots” with regular collection efficiency reaching 99.6% in Nov-Dec 2025 and lower slippages of ₹942 crores compared to ₹1,118 crores in Q2.
- Housing Finance: Growth slowed due to a strategic shift in underwriting; the bank converted 57 housing centers into full-fledged branches. Management is moving toward rules-based underwriting to address legacy NPA issues in the affordable segment, which is currently 56% salaried.
- Wholesale & Retail Assets: Non-EEB portfolio grew 25% YoY, now accounting for 65% of total advances. Growth was led by secured retail segments (CV/CE, Gold, Auto) and high-quality corporate credit where 85% of exposure is rated ‘A’ and above.
Company-Specific & Strategic Commentary
- ARC Portfolio Sale: The bank executed a major clean-up by selling ₹3,707 crores of written-off book (at 9% valuation) and ₹3,165 crores of NPAs (at 18% valuation) to ARCs. This resulted in a combined cash inflow of ₹429 crores, used to strengthen the P&L and offset provisions.
- Product Flexibility: Launched 18-month and 36-month tenure options for group loans alongside bi-weekly and monthly repayment frequencies. This shift from weekly collections aims to improve staff productivity and match customer cash-flow cycles.
- Digital Transformation: Enhanced “Bandhan Corporate Internet Banking” and onboarded Razorpay as a gateway partner. The bank is piloting Bluetooth printers for instant receipts and real-time SMS acknowledgments to improve field control and trust.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Credit Cost | 1.6% - 1.7% by Q4 FY27 | Management expects steady reduction as EEB stabilizes and legacy NPAs are resolved. |
| Loan Growth | 15% - 17% CAGR | Multi-year target focusing on a balanced mix of 40% unsecured and 60% secured assets. |
| NIM | >6.0% | Expected improvement driven by repricing of term deposits (35-50 bps benefit) offsetting repo rate cuts. |
Risks & Constraints
| Risk | Context |
|---|---|
| Labor Code Impact | The bank made a ₹120 crore provision for gratuity due to new wage definitions; further impacts are unknown until state-specific rules are notified. |
| CASA Pressure | Industry-wide softness and internal rate cuts led to a 4% YoY decline; aggressive retail push is required to replenish high-value outflows. |
| Asset Quality (Mortgages) | Rising NPAs in the housing segment due to legacy underwriting practices; transition to centralized, independent underwriting is ongoing. |
Q&A Highlights
EEB Asset Quality
- Question: What is the current assessment of EEB slippages and collection efficiency? (Jai Mundhra)
- Answer: Slippages improved by ₹170 crores QoQ to ₹942 crores; regular collection efficiency for Nov-Dec was 99.6% (Vishal Wadhwa). ARC Transaction Details
- Question: Can you clarify the cash vs. SR split of the ARC sale? (Piran Engineer)
- Answer: For the ₹3,165 cr NPA pool, we received ₹303 cr cash (53%) and ₹266 cr in SRs (47%). For the ₹3,707 cr written-off pool, we received ₹126 cr cash (38%) and ₹206 cr in SRs (62%) (Rajeev Mantri). Repayment Frequency Shift
- Question: Will moving from weekly to monthly collections affect discipline? (Jai Mundhra)
- Answer: No; center meeting discipline remains the core. The move to fortnightly/monthly for homogeneous groups increases staff productivity by allowing them to handle more accounts (Rajinder Babbar). Geographic Risks
- Question: Is there any stress in West Bengal due to upcoming elections or local issues? (Nitin Aggarwal)
- Answer: West Bengal remains one of the best-performing states with >99% collection efficiency on regular loans; no material impact from reported local disturbances (Partha Pratim Sengupta).
Key Takeaway
Bandhan Bank’s Q3 FY26 performance was defined by a deliberate balance sheet cleansing and a structural shift toward a universal banking model. The bank successfully reduced its GNPA ratio from 5.1% to 3.3% through a large-scale sale of ₹6,872 crores in stressed assets to ARCs. While PAT was constrained at ₹206 crores due to a ₹120 crore one-time labor code provision and accelerated provisioning to maintain a 74% effective PCR, core operational metrics showed resilience. NIMs improved to 5.9% as high-cost bulk deposits were pared down, and the secured loan mix reached a milestone of 57%. Management has largely completed the portfolio rebalancing ahead of schedule, with the EEB segment now comprising 35% of AUM. The bank maintains a positive outlook, targeting a 1.6-1.7% credit cost by FY27 and 15-17% loan growth, though CASA retention and mortgage asset quality remain key monitorables for the coming quarters.
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