Bandhan Bank slashes ROA target, tech costs surge 65%
New ROA guidance of **1.2%-1.4%** for Q4 FY27 replaces earlier **1.6%-1.8%**; NIM improvement hopes dropped as tech spending becomes structural.
— 5 earlier stories on Bandhan Bank Ltd. →What's new
- ROA target cut by 40-50 bps to 1.2%-1.4% for Q4 FY27 exit.
- NIM improvement expectations walked back; maintaining 6.2% is a success.
- Technology costs surged 65% and are described as ongoing investment.
Why this matters
The revision confirms that margin pressure from funding costs and tech inflation is more persistent than management earlier projected. The bank is now targeting a more realistic ROA range, while stable asset quality and falling credit costs provide a floor. The strategic pivot away from microfinance continues, with non-microfinance loans now two-thirds of the book.
What we're watching
- Whether NIM can hold 6.2% as funding costs rise further.
- Impact of monsoon uncertainty on rural loan performance.
- Board's capital plan — size and timing still undisclosed.
The full read
Bandhan Bank's ROA target just got a haircut. The new 1.2%-1.4% guidance for Q4 FY27 replaces the earlier 1.6%-1.8%, a 40-50 bps downgrade driven by rising funding costs, tech inflation, and monsoon uncertainty. NIM improvement expectations are also shelved. Holding 6.2% is now the goal. Technology costs jumped 65% and management says that's structural, not temporary. That is a problem for margins. But asset quality is steady: gross NPAs at 3.1% and credit costs down to 1.8%. The bank is also shifting away from microfinance. Non-microfinance loans are now two-thirds of the book. The new targets are more grounded. Still, the open question is whether NIM can hold as funding costs keep climbing. Stability, not growth, is the near-term story.
Questions answered
- Why did Bandhan Bank cut its ROA target?
- Rising funding costs, technology inflation, and monsoon uncertainty pressured margins. The bank now expects Q4 ROA of 1.2%-1.4%, down from the earlier 1.6%-1.8%.
- What is the new NIM outlook?
- Management no longer expects further NIM improvement. Maintaining the current 6.2% is considered a success.
- How much did technology costs rise?
- Technology costs surged 65% and are described as an ongoing investment, not a one-time item.
- How is asset quality holding up?
- Gross NPAs remained stable at 3.1% and credit costs declined to 1.8%, indicating resilience in the loan book.
- What is the loan book composition?
- Non-microfinance advances now make up two-thirds of the portfolio, showing continued diversification away from microfinance.
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All notes on BANDHANBNK →- 21 Jul 2026 · 7:04 PM IST Bandhan Bank slashes ROA target, tech costs surge 65%
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