Bandhan Bank, a leading private sector lender with a strong focus on financial inclusion, has reported a remarkable 483% year-on-year (YoY) surge in net profit for the fourth quarter of the financial year ended March 31, 2025. The sharp jump in profitability, from ₹55 crore in Q4 FY24 to ₹318 crore in Q4 FY25, marks a turning point in the bank’s earnings trajectory after facing asset quality pressures in recent years.
While the net revenue witnessed a marginal dip of 3%, and operating profit slipped slightly, the massive drop in provisions and contingencies played a pivotal role in driving overall profitability. Investors and analysts are closely watching Bandhan Bank’s recovery story as it strives to stabilize asset quality, boost retail lending, and maintain momentum in deposit growth.
Q4 FY2025: Key Financial Highlights
1. Staggering 483% YoY Net Profit Growth
Bandhan Bank reported ₹318 crore in net profit, compared to just ₹55 crore in the same quarter last year. This substantial increase highlights the bank’s effective management of credit costs and provisioning in a post-pandemic operating environment.
This performance also reflects the gradual normalization of Bandhan’s historically stressed microfinance book, particularly in eastern India, where the bank has a large borrower base.
2. Net Interest Income (NII) Grows 4% YoY
Despite a slight decline in total revenue, Bandhan Bank recorded NII of ₹2,756 crore, representing a 4% YoY increase. This steady rise in core interest income indicates stable loan demand and improving interest spreads across its retail and wholesale portfolios.
NII continues to be a critical contributor to the bank’s operating stability and is a key driver of sustainable profitability.
3. Operating Profit Slips
The bank reported an operating profit of ₹1,838 crore, down from ₹1,571 crore. This marginal decline is attributed to slight moderation in income coupled with rising operating expenses related to retail expansion and digital infrastructure upgrades.
Despite this dip, operating margins remain healthy, signaling solid operating efficiency.
4. Provisions and Contingencies Drop Sharply
A major driver of the profitability surge was the sharp reduction in provisions, which fell to ₹1,260 crore in Q4 FY25. In comparison, Bandhan Bank had to make higher provisions in the past due to delinquencies in its micro-banking segment.
Lower provisioning is a clear sign of improving asset quality and better repayment trends, especially in the microfinance and affordable housing segments.
5. Asset Quality Metrics Show Resilience
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EEB (Emerging Entrepreneurs Business) loan share was reported at 97.80%, reflecting confidence in the core microfinance customer base.
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Provision Coverage Ratio (PCR) stood at 73.70% (excluding technical write-offs), which is well within industry norms and indicates adequate risk provisioning.
Bandhan Bank’s Deposits and Advances: Healthy Growth Trajectory
1. Deposit Base Expands 12% YoY
Bandhan Bank reported a total deposit base of ₹1.51 lakh crore in Q4 FY25, up 12% from the previous year. This growth reflects rising consumer confidence and effective retail outreach in semi-urban and rural India.
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CASA (Current Account and Savings Account) deposits stood at ₹47,437 crore, with a CASA ratio of 31.40%. A healthy CASA ratio enables the bank to maintain a lower cost of funds and enhance lending spreads.
2. Loan Book Grows 10% YoY
The bank’s gross advances reached ₹1.37 lakh crore, up 10% YoY, showcasing improved disbursement momentum across segments.
Segment-Wise Growth:
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Retail lending saw a staggering 98% YoY growth, signaling Bandhan Bank’s renewed focus on granular, low-risk retail assets.
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Wholesale banking grew by 35% YoY, demonstrating the bank’s efforts to diversify its loan book.
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Housing loans registered a steady 11% YoY increase, reflecting rising demand in affordable housing—one of Bandhan’s focus areas.
Dividend Announcement: Shareholder Reward Strategy
Bandhan Bank’s board of directors has proposed a dividend of ₹1.50 per equity share (face value of ₹10 each), translating to 15% of Q4FY25 profits. This dividend is subject to shareholder approval in the upcoming Annual General Meeting (AGM).
The dividend yield, currently at 0.91%, may appear modest but reflects a conservative capital retention approach as the bank continues to rebuild its capital buffers after heavy provisioning cycles.
Bandhan Bank Share Performance
Share Price as of April 30, 2025:
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Closed at ₹165.00, down 1.73% or ₹2.90
Stock Metrics:
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1-Month Return: +10.38%, reflecting bullish sentiment ahead of Q4 earnings.
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52-Week Range: ₹128.16 – ₹222.31, indicating moderate volatility.
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P/E Ratio: 10.71, suggesting fair valuation relative to earnings growth.
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Dividend Yield: 0.91%, suitable for income-focused investors.
Despite a brief pullback, analysts expect positive momentum ahead, especially if profit sustainability continues into FY2026.
Strategic Highlights and Operational Levers
Bandhan Bank’s transformation post-COVID-19 continues to be driven by:
1. Diversification Beyond Microfinance
The bank has strategically diversified into:
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Affordable housing loans
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Retail secured loans
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Wholesale and corporate banking
This reduces its dependence on microfinance, which, while profitable, can be exposed to localized stress and political disruptions.
2. Focus on Emerging India
With operations spanning underserved Tier 2/3 towns and rural belts, Bandhan is well-positioned to benefit from the next wave of credit growth in India’s hinterlands.
3. Improved Credit Discipline
After earlier challenges in collection and borrower behavior, especially during the pandemic, the bank has improved its underwriting models and digital recovery mechanisms.
Risk Factors and Caution Signals
Investors should consider these potential headwinds:
1. Asset Quality Fragility
While NPAs have declined, any economic or climatic shock can disproportionately affect micro-borrowers—posing risks to repayment.
2. Geographic Concentration Risk
A large portion of Bandhan Bank’s book is concentrated in eastern India. Natural disasters, regional political decisions, or local NPAs could trigger volatility.
3. Competitive Intensity
With NBFCs and fintechs entering rural credit markets, Bandhan Bank must innovate continuously to retain and expand its customer base.
Analyst Outlook: What Lies Ahead?
Analysts are cautiously optimistic on Bandhan Bank, citing:
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Valuation Comfort: With a P/E of 10.71 and a strong profit rebound, the bank offers value.
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Turnaround Potential: If the low provisioning trend continues, Bandhan Bank could report significantly higher annual profits in FY26.
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Retail Strategy Success: The 98% growth in the retail book highlights execution strength in a key growth area.
However, markets will closely monitor:
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FY26 guidance on credit cost
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Further moderation in NPAs
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CASA ratio trend and net interest margins
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Management commentary during the AGM
Final Thoughts
Bandhan Bank’s Q4 FY2025 results reflect a strong turnaround, led by reduced provisions and improved profitability. The massive 483% jump in net profit, rising loan disbursals, and growing retail presence underscore a bank that is reestablishing itself on a more stable footing.
While challenges remain—especially on the asset quality and geographical concentration front—the improving metrics offer reassurance to both retail and institutional investors. For long-term investors seeking exposure to India’s deepening financial inclusion and rural credit cycle, Bandhan Bank presents a compelling opportunity, especially at current valuations.
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