1. At a Glance
Bandhan Bank has spent the last few years behaving like a bank trying to outrun its own past.
This quarter, for the first time in a while, it looked less like running and more like rebuilding.
Q4 FY26 came with three numbers the market could not ignore:
- PAT up 68% YoY to ₹534 crore
- Gross advances up 12.6% to ₹1.54 lakh crore
- GNPA down sharply from 4.7% to 3.3%
That combination is unusual.
Normally, banks improve asset quality by shrinking growth.
Or grow fast and damage asset quality.
Doing both together is what attracts attention.
And then there is the bigger shift.
Bandhan was once basically a disguised microfinance machine wearing a banking license.
Now EEB plus SBAL is down to 35% of the book, while secured assets are 56.2%.
That is not cosmetic. That is business model surgery.
The market has long discounted Bandhan because it feared:
- East India concentration risk
- Unsecured MFI shocks
- Governance churn
- Volatile credit costs
- “One quarter good, next quarter ugly” syndrome
Fair concerns.
But what happens when those risks start shrinking simultaneously?
Interesting things happen to valuations.
Because markets do not rerate banks when profits rise.
They rerate when earnings become believable.
That may be the real story here.
Even the old management promise from Q3 concall—reduce risk, improve collections, push secured lending, let margins recover—was largely walked, not merely talked.
That matters.
Indian banking history is full of management teams giving PowerPoint miracles.
Execution is rarer.
Bandhan may be entering the zone where investors stop asking:
“Can they survive?”
and begin asking:
“What multiple should this deserve?”
Big difference.
But before getting carried away—
Is this a structural turn?
Or just a well-dressed quarter?
That is the detective work.
2. Introduction
Bandhan is still one of the strangest creatures in Indian banking.
Half universal bank.
Half recovering microfinance empire.
Half… yes that makes three halves.
Exactly.
That is the problem.
And maybe also the opportunity.
Its old model created extraordinary yields.
And extraordinary stress.
You don’t get 20%+ lending yields without occasionally meeting borrowers who treat repayment as optional philosophy.
What Bandhan has been doing over the past few quarters is effectively becoming less exciting.
For banks, that is bullish.
Secured lending rising.
Retail deposits granular.
Wholesale book scaling.
Microfinance concentration falling.
Collections improving.
Credit cost dropping to 2.0% from 3.9%.
Even NIM rose to 6.2%, after management called Q2 the trough.
They called it.
They delivered it.
Rare.
Yet the FY26 PAT still fell 55% YoY to ₹1,224 crore because provisioning remained heavy.
That creates the classic inflection puzzle:
Do you value the ugly trailing earnings?
Or cleaner forward normalized earnings?
That debate is where money gets made or lost.
Ask yourself:
If Bandhan is no longer a distressed MFI story but a transitioning retail bank story…
should it trade like old Bandhan?
3. Business Model — What Do They Even Do?
Originally:
Lend to women borrowers in groups.
Collect weekly.
Print money.
Then occasionally lose some.
Now far more diversified:
Loan Mix
- EEB Group: 22.4%
- SBAL: 12.1%
- Housing: 23.2%
- Retail: 9.5%
- Wholesale Banking: 31.4%
That is a proper bank.
Not just microfinance with nicer branding.
Three engines now:
A) EEB
Still core DNA.
Still profitable.
But intentionally shrinking in dominance.
Like reducing spice in a curry that was too hot.
B) Secured Retail/Housing
Much safer.
Lower yields.
Lower heart attacks.
C) Wholesale Banking
Quietly now nearly one-third of the book.
Interesting because this piece may surprise people.
Bandhan used to be mocked for not being a “real bank.”
