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Banks (Finance)

Bandhan Bank's Profitability Under Pressure Due to Microfinance Stress and Rate Transmission

Strategic Insights

— 1 min read

Bandhan Bank, a leading private lender, saw its post-tax profit decline to ₹112 crore in the second quarter of the current financial year, down from ₹937 crore in the same period last year. The bank's net interest income decreased to ₹2,589 crore from ₹2,934 crore in the year-ago period. Bandhan Bank's Managing Director and CEO, Partha Pratim Sengupta, attributed the less-than-expected performance to a combination of interest rate transmission, higher slippages, and subdued growth in microfinance advances.

Key Takeaways:

  • The post-tax profit of Bandhan Bank decreased to ₹112 crore in Q2FY26, down from ₹937 crore in Q2FY25.
  • The bank's net interest income stood at ₹2,589 crore, down from ₹2,934 crore in the year-ago period.
  • Partha Pratim Sengupta attributed the decline to interest rate transmission, higher slippages, and subdued growth in microfinance advances.
  • The 75-basis-point repo cut was proactively passed on to customers, which had a short-term impact on margins.
  • Slippages remained elevated due to ongoing stress in the EEB (microfinance) segment, which is expected to continue for 1-2 months.
  • Growth in the EEB portfolio remains subdued due to industry-level guardrails taking a longer time to materialize than anticipated.
  • The growth in advances came largely in the last quarter, making limited contributions to profit and loss in Q2.
  • The bank expects recovery as deposit costs ease and repricing of deposits takes place over the next few quarters.

Statistics:

  • Post-tax profit: ₹112 crore (Q2FY26) vs. ₹937 crore (Q2FY25)
  • Net interest income: ₹2,589 crore (Q2FY26) vs. ₹2,934 crore (Q2FY25)
  • Repo cut: 75 basis points
  • Slippages: Elevated due to ongoing stress in the EEB (microfinance) segment
  • Growth in EEB portfolio: Subdued due to industry-level guardrails taking a longer time to materialize

Sources:

  • Sengupta, P. P. (2025). Earnings call of Bandhan Bank. Bandhan Bank.
  • ABP Private Limited (2025). Bandhan Bank's Q2FY26 earnings. ABP Private Limited.

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