Bandhan Bank shares plunge nearly 17% after lender cuts RoA guidance

The lender lowered its FY27 return on assets guidance after June-quarter earnings, overshadowing a 35 per cent rise in net profit and weighing on investor sentiment

Shares of Kolkata-based Bandhan Bank plunged on Wednesday after the lender, following its June-quarter (Q1 FY27) earnings announced after market hours on Tuesday, lowered its return on assets (RoA) guidance by 40 basis points (bps) to 1.2-1.4 per cent. The stock ended the day nearly 17 per cent lower at Rs 173.40 on the BSE.

 

The bank's management cut its Q4 FY27 exit RoA expectation by 40 bps to 1.2-1.4 per cent, comprising 30 bps from weaker margins and 10 bps from elevated operating costs.

 

The bank's net profit of Rs 502 crore, up 35 per cent year-on-year (YoY), missed estimates due to weak loan growth of 1 per cent sequentially and lower treasury gains. Advances were weighed down by a sequential contraction in the microfinance portfolio. The bank's management is targeting 14 per cent YoY credit growth in FY27.

 

 

While net interest margin (NIM) was in line at 6.2 per cent, the cost-to-income ratio rose 188 bps sequentially to 61.5 per cent, leading to a 6 per cent sequential decline in pre-provision operating profit.

 

According to Suresh Ganapathy, managing director and head of financial services research at Macquarie Capital, "Constrained margins and delayed operating leverage leave the near-term earnings outlook cautious (for Bandhan Bank). RoA remains subpar, and the path towards RoA improvement remains clouded."