💰 Financial Performance

Revenue Growth by Segment

Gross advances grew 7% YoY to Rs. 1.4 lakh Cr as of Q2 FY26. The Emerging Entrepreneur Business (EEB) segment declined 13% YoY to Rs. 51,733 Cr, while the secured loan portfolio grew 25% YoY, now accounting for 55% of total advances. Non-interest income moderated 10% YoY due to lower treasury gains, but third-party product income grew 48% YoY.

Geographic Revenue Split

The Eastern and North-Eastern regions account for 38% of the overall loan portfolio as of June 30, 2025, down from 44% in March 2024. West Bengal and Assam remain the primary concentration hubs, housing 55% of the bank's outlets.

Profitability Margins

Return on Average Assets (RoAA) was 1.5% for fiscal 2025, up from 1.3% in fiscal 2024. For H1 FY26, RoA stood at 0.5% and Return on Equity (RoE) was 4%. Net income for Q2 FY26 was Rs. 3,135 Cr with a PAT of Rs. 112 Cr.

EBITDA Margin

Operating profit for Q2 FY26 stood at Rs. 1,310 Cr. The operating profile was impacted by a 75 bps repo rate cut passed to customers, which compressed margins in the short term until deposit repricing occurs.

Capital Expenditure

Not disclosed in available documents; however, the bank added 4 new branches in Q2 FY26, bringing the total network to 1,754 branches.

Credit Rating & Borrowing

ICRA reaffirmed [ICRA]AA- (Stable) for the NCD programme and [ICRA]A1+ for certificates of deposit. Cost of funds for H1 2025 was 6.7% (annualized), up from 6.0% in fiscal 2024.

⚙️ Operational Drivers

Raw Materials

Not applicable for banking services; the primary cost driver is the 'Cost of Funds' representing interest paid on deposits.

Import Sources

Not applicable for banking services.

Key Suppliers

Not applicable for banking services.

Capacity Expansion

Current branch network stands at 1,754 branches. Total banking outlets, including doorstep service centres (DSCs) and GRUH centres, reached 6,344 across 35 states and UTs as of June 30, 2025.

Raw Material Costs

Cost of funds increased to 6.7% in H1 2025 from 6.0% in FY24. The bank is proactively reducing savings account rates and expects lower term deposit costs from Q4 FY26 to improve margins.

Manufacturing Efficiency

Not applicable for banking services.

Logistics & Distribution

Not applicable for banking services.

📈 Strategic Growth

Expected Growth Rate

7%

Growth Strategy

The 'Bandhan 2.0' strategy focuses on transitioning from a microfinance-focused bank to a full-service commercial bank. This involves diversifying into secured assets (now 55% of book), expanding the branch network (1,754 branches), and increasing third-party product cross-selling (which grew 48% YoY).

Products & Services

Microfinance loans (EEB), housing loans (GRUH), wholesale banking, retail assets, savings accounts, current accounts (CASA), and term deposits.

Brand Portfolio

Bandhan Bank, GRUH Finance.

New Products/Services

Third-party products (insurance, mutual funds) contributed to a 48% YoY growth in specific fee income.

Market Expansion

Geographical diversification into Western India following the GRUH Finance merger, while maintaining a competitive edge in East and North-East India (38% of portfolio).

Strategic Alliances

Amalgamation with GRUH Finance Limited (completed October 2019) to diversify into the housing finance segment.

🌍 External Factors

Industry Trends

The microfinance industry is implementing new guardrails to manage overleveraging (Bandhan's overleveraged EEB portion is 9.5% vs industry 19% a year ago). There is a broad industry shift toward secured lending and digital customer journeys.

Competitive Landscape

Faces competition from universal banks and NBFC-MFIs; Bandhan maintains a superior 90+ and 180+ DPD profile (2.08%) compared to the industry average (3.27%).

Competitive Moat

Durable advantage through a 20-year track record in microfinance and deep local knowledge in East/North-East India. The group-based individual lending model provides a unique collection and engagement framework.

Macro Economic Sensitivity

Highly sensitive to interest rate cycles; a 75 bps repo cut in Q1 was passed to customers in Q2, impacting immediate yields.

Consumer Behavior

Shift toward secured retail and housing assets as the bank transitions to a full-service commercial model.

Geopolitical Risks

Direct exposure is not material; however, regional economic conditions in West Bengal and Assam (38% of advances) are critical monitorables.

⚖️ Regulatory & Governance

Industry Regulations

Promoter (BFHL) is required to reduce shareholding in the bank to 26% by August 2030 (currently 40%). The bank must also comply with RBI risk weight norms for microfinance loans.

Environmental Compliance

Direct exposure to environmental risks is not material given the service-oriented nature of banking.

⚠️ Risk Analysis

Key Uncertainties

Ongoing stress in the EEB segment with gross slippages of Rs. 1,118 Cr in Q2 FY26. Technical write-offs of Rs. 865 Cr were undertaken to manage headline GNPA metrics.

Geographic Concentration Risk

38% of advances and 55% of banking outlets are concentrated in the Eastern and North-Eastern regions, exposing the bank to regional event risks.

Technology Obsolescence Risk

The bank is mitigating technology risks through its Bandhan 2.0 transformation initiatives focused on seamless integrated customer journeys.

Credit & Counterparty Risk

GNPA ratio remained stable QoQ at 5% as of Q2 FY26; Net NPA ratio was 1.4%. Provision Coverage Ratio (PCR) including technical write-offs improved to 87.6%.