The shares of Bandhan Bank tumbled 15% on July 22 even though the firm reported a robust jump in quarterly profits owing to concerns about the reduced return on assets (RoA) forecast for the bank along with the expected stress on net interest margin (NIM) for the next two quarters.
The stock fell to 10% lower circuit during the day and was down by 15% at ₹177.5 per share at about 10:20 AM. The fall was attributed to management comments about the potential stress in profitability due to increased funding costs and technology costs in the current challenging environment.
Why Bandhan Bank Stock Fell After Q1FY27 Results
While there was an increase of 35% in net profit year-on-year for Bandhan Bank, the conservative forecast by the management has attracted more attention from the investors. There is a reduction in the FY27 RoA forecast from 1.6%-1.8% to 1.2%-1.4%.
According to the management, the reason for the failure to attain the expected RoA level is caused by external factors such as higher deposit costs and cost of technology. There will be some decline in the NIMs of the next two quarters owing to increased funding costs.
There will be a slight reduction in the forecast of the loan growth to the bottom end of 14%-15% as there are concerns over the asset quality due to the increased energy costs, disrupted supply chain, and uncertain monsoons.
Q1FY27 Profit Rises 35%
For FY27 Q1, Bandhan Bank registered a net profit of ₹502 crore, a YoY rise of 35% as against ₹372 crore in Q1 of the previous year.
The NII of the company rose by 5.9% to ₹2,921 crore from ₹2,757 crore, whereas the net total income witnessed a minor increase of 1.2% at ₹3,524 crore versus ₹3,483 crore in the corresponding period.
Gross advances of the bank witnessed a rise of 16.4% at ₹1,55,555 crore as of June 2026 as against ₹1,33,625 crore in the corresponding period last year.
Retail portfolio (excluding housing portfolio) witnessed growth of 45%, Wholesale banking witnessed a growth of 38%, whereas the housing portfolio witnessed growth of
Asset Quality Improves in Q1FY27
Bandhan Bank showed improvement in asset quality for the quarter. The GNPA ratio dropped to 3.1% from 3.3% in the previous quarter, whereas net NPA ratio improved to 0.9% from 1%.
Gross NPA ratio improved by 182 bps on year-over-year (YoY) basis, whereas net NPA ratio fell by 43 bps on a year-over-year (YoY) basis. Difference between net NPA and Gross NPA.
The provision coverage ratio, along with technical write-offs, was at 85.9% as of June 30, 2026. Provisions and contingencies, excluding tax, fell 40% on year-over-year (YoY) basis to ₹683 crore.
The capital adequacy ratio of the bank was at 18.2% against 19.4% recorded a year ago. Return on assets was at 1%, while RoE was at 7.7%.
Management Focuses on Long-Term Growth Strategy
However, the prevailing external environment is likely to push back the time line of this goal.
The bank stressed that it will continue to concentrate on growth, development of the distribution network, introduction of new products, and digitalization.
The bank further announced the appointment of Vinay Jain as the interim chief financial officer for a period of six months starting September 26, 2026, due to the resignation of Rajeev Mantri.
While it was evident from the Q1FY27 results that the bank witnessed an excellent earnings growth rate and improved asset quality, worries over reduced targets for profitability, margin compression, and limited prospects of loan growth led to steep decline in the share price of the bank.
