Bandhan Bank Cuts Future Profit Outlook, Stock Plummets

Bandhan Bank saw its net profit surge by 34.8% year-on-year to ₹501.6 crore in the first quarter of fiscal year 2027, primarily due to reduced provisions. The bank's net interest income grew 6% year-on-year to ₹2,921 crore, with net interest margins holding steady at 6.2%.

Despite the profit increase, the lender's stock experienced a significant drop of over 14% in early trading. This decline followed management's decision to lower the FY27 exit return-on-assets (RoA) guidance to a range of 1.2%-1.4%, down from the previously projected 1.6%-1.8%.

Asset quality showed sequential improvement, with gross non-performing assets decreasing to 3.15%. Loan growth was robust at 18% year-on-year, bolstered by the non-MFI portfolio. Conversely, deposit growth remained sluggish at 7% year-on-year, causing the credit-to-deposit ratio to rise to 92%.

Brokerage firms have reacted to the revised outlook, with several cutting earnings estimates. Motilal Oswal downgraded its rating to 'Neutral', while JM Financial and Nuvama Institutional Equities adjusted their ratings and target prices, reflecting concerns about margin pressure and operating expenses.