Bandhan Bank Q2 Profit Plummets to ₹112 Crore Amid High Defaults and Tight Margins

CEO Partha Pratim Sengupta cites microfinance sector stress and swift rate changes for the bank’s reduced profitability, anticipates recovery as deposit expenses decrease.

Financial Performance Review

Private lender Bandhan Bank saw a sharp drop in post-tax profit. The profit fell to ₹112 crore in Q2 of the current fiscal year. This is significantly down from ₹937 crore reported one year ago. The bank’s net interest income also decreased. It stood at ₹2,589 crore compared to ₹2,934 crore in the year-ago period.

CEO Attributes Underperformance

Bandhan Bank’s MD and CEO is Partha Pratim Sengupta. He explained the bank’s lower-than-expected Q2FY26 performance. He blamed a combination of factors. These include faster interest rate transmission and elevated slippages. Also, subdued growth in microfinance advances contributed to the decline.

Rate Transmission Impacts Margins

Sengupta highlighted the effect of the repo rate cut. “The 75-basis-point repo cut in the first quarter was proactively passed on to our customers from the first day of Q2, and that has a short-term impact on the margins.” He shared this with analysts during the earnings call. He expects future relief. “As the repricing of deposits takes place over the next few quarters, we expect to see the full benefit of lower funding costs, which will help improve margins and support profitability,” Sengupta stated.

Microfinance Stress Continues

Slippages remained high, reflecting stress in the EEB (microfinance) segment. “Slippages remained elevated, reflecting the ongoing stress in the EEB (microfinance) segment, which was anticipated to be corrected during the quarter, but it seems that it will continue for 1-2 months.” Sengupta noted that portfolio growth is still slow. “Growth in the EEB portfolio remains subdued as the full impact of the industry-level guardrails is taking a longer time to materialise than anticipated.” He added that most advance growth happened late in the quarter. This provided limited contribution to the second quarter’s profit and loss.