Bandhan Bank's fundamental picture is improving

Bandhan Bank's fundamental picture is improving, especially on asset quality, but margins and deposit growth remain key concerns. In Q1 FY27, PAT increased 34.9% YoY to ₹502 crore, while NII grew 5.9% to ₹2,921 crore. Provisions declined sharply by about 40% YoY to ₹683 crore, which was a major contributor to the profit improvement. The biggest positive is asset-quality improvement. GNPA declined to 3.15% from 3.27% in Q4, while NNPA improved to 0.93% from 0.97%. Slippages also reduced to ₹1,080 crore versus ₹1,550 crore a year earlier. The provision coverage ratio, including technical write-offs, stood at 85.9%, providing a reasonable buffer against legacy stress. Another positive is diversification away from the traditional microfinance-heavy model. Gross advances grew 16.4% YoY to ₹1.56 lakh crore, while the secured-loan mix increased to around 57% from 52.1% a year earlier. Retail banking excluding housing grew 45%, and wholesale banking grew 38%. The microfinance portfolio, meanwhile, was broadly flat at around ₹52,641 crore.