Bandhan Bank on Friday reported a 65 per cent drop in net profit for the quarter ended June 30, 2025 (Q1FY26) as a contraction in the microfinance book, higher slippages and higher provisions impacted the bottomline of the bank.

Net profit of the city headquartered private lender was ₹372 crore during Q1FY26 compared to ₹1063 crore in Q1FY25. Net interest income during Q1FY26 was ₹2757 crore, down 8 per cent from ₹2987 crore in the corresponding quarter previous year.

The bank’s microfinance (EEB) portfolio recorded a 14.7 per cent fall in Q1FY26 as the industry adjusted to the various guardrails such as cap on number of lenders per borrower, cap on indebtedness and no lending to delinquent clients among others.

On the asset quality front, fresh slippages during the quarter was ₹1553 crore of which ₹1089 crore was from the EEB segment.

“Our EEB portfolio has had a bearing on both our overall growth and profitability in Q1FY26. There has been an impact because of the guardrails and I think that it has affected all the lenders and we are not an exception. But it was necessary. From Q3 onward probably there will be improvement,” said Partha Pratim Sengupta, MD and CEO, Bandhan Bank.

“During the quarter we undertook technical writeoff amounting to ₹1047 crore. The provision coverage ratio including the technical writeoff improved to 87.3 per cent from from 84.7 per cent in Q1FY25,” said Sengupta.

He added that at the beginning of previous fiscal, the outlook of the microfinance sector was optimistic, which changed from August onwards. “We all know the over-leveraging issues in the microfinance segment and there has been factors beyond the bank’s control that has adversely affected the segment. Slippages were high and we consciously took a decision to grow slow in the segment,” he said.