According to Partha Pratim Sengupta, the Chief Executive Officer of Bandhan Bank Ltd., the bank’s quarterly profits are expected to experience significant growth starting from the third quarter of the current financial year.
During an interview with Newsstate24 Profit on Friday, Sengupta indicated that several factors, particularly a reduction in slippages within the microfinance sector, would contribute to the anticipated increase in quarterly profits.
Although the bank’s operating profit has been affected by a shrinking microfinance portfolio, Sengupta expressed optimism for the fiscal year 2026. He stated, “We are confident that our quarterly profits will improve considerably moving forward, mainly due to the deceleration of slippages in our microfinance book. While the first and second quarters may present some challenges, we anticipate stability beginning in the third quarter.”
He noted that the bank’s write-offs were distributed between the third and fourth quarters, resulting in a higher profit due to lower provisions. The bank’s net profit for the fourth quarter of FY25 surged nearly sixfold to Rs 318 crore, up from Rs 55 crore in the same quarter of the previous year.
Sengupta highlighted that the slowdown in slippages in the microfinance segment is a key factor driving expectations for increased quarterly profits. He remarked, “We were not immune to the challenges faced across the country, which compelled us to make strategic decisions, including limiting our loan book in certain regions.”
This strategy resulted in slower growth and a decline in outstanding loans. As demand for microfinance is significantly higher than for secured loans, the overall operating profit of the bank was slightly affected, according to Sengupta.
In terms of long-term sustainability, the bank is also focused on transitioning into a universal banking model by diversifying its product offerings. This shift has led to the growth of its secured loan portfolio, which increased from 23% to 50.5% in FY25.
“As part of our efforts to evolve into a more universal bank, we have substantially expanded our secured loan portfolio from 23% last year to 50.5% in FY25. Although this may have a minor effect on yields, the increase in overall business volume will enhance profits,” he explained.
Sengupta also mentioned that the bank is planning to introduce new revenue streams through services like payments, which could further boost profitability.
Regarding the pressure on net interest income, the CEO acknowledged a decline in Q4 but remained hopeful for FY26. “We have streamlined our cost of funds, particularly concerning deposits. While the impact on term deposits will be gradual, we expect a significant effect in the upcoming quarters,” he stated.
On the repercussions of the Reserve Bank of India’s rate cut, Sengupta noted that its effects would be particularly felt in the first and second quarters. However, he is optimistic that by Q3, the bank will be able to mitigate much of this impact.
“Presently, 55% of our loan portfolio is under fixed income, 5% through MCLR, and 40% linked to EBR, with immediate transmission already occurring. While 40% of our loans may be affected by rate cuts in Q1 and Q2, we anticipate benefiting from our deposit rationalization starting in Q3,” Sengupta said.
The reduction in provisions led to Bandhan Bank’s standalone net profit rising nearly sixfold in the fourth quarter of FY 2024-25, though it still fell short of analysts’ expectations.
On the BSE, shares of Bandhan Bank closed down 2.38% at Rs 161.7 each, in contrast to a 0.32% increase in the benchmark Sensex on Friday.
For more business news, visit Newsstate24 Profit.
