Bandhan and IDFC First profits jump as microfinance stress fades
Bandhan Bank's Q2 FY27 profit rose over fivefold and IDFC First's nearly tripled, as bad loans fell. What the numbers say about the microfinance clean-up.
Bandhan Bank and IDFC First Bank both reported sharply higher profits for the September 2026 quarter, helped by falling bad loans, according to Investing.com's coverage of their results presentations. Bandhan's profit after tax was about Rs 620 crore, up 455.7% from a year earlier, while IDFC First's rose 196.5% to Rs 1,045 crore. The figures are the banks' own and have not been independently checked here.
Bandhan: a clean-up that is showing in the numbers
Bandhan presented its Q2 FY27 results on 28 October. Net interest income, the gap between what a bank earns on loans and pays on deposits, was Rs 2,960 crore, up 14.4%. Advances grew 13.1% to about Rs 1.58 lakh crore. Gross non-performing assets (loans where payments are overdue by 90 days or more) fell to 3.1% of advances from 5.0% a year earlier, and net NPAs, after provisions, stood at 0.9%. Credit cost, the money set aside for bad loans, dropped to 1.8% from 3.4%.
The bank's microfinance-heavy "EEB" book (group lending, small business and agriculture loans) is where the story lies. It was Rs 52,616 crore, up just 1.7% year on year, and now makes up 33.2% of advances against 36.9% a year ago. Bad loans in that book were 6.0%, down from 9.6%. On the earnings call, CEO Parthapratim Sengupta said the "de-growth in EEB has now been arrested", and management expects the book to grow 8% to 10% in the next two quarters.
IDFC First: growth with a smaller microfinance slice
IDFC First's profit was Rs 1,045 crore, though it fell 2.8% from the previous quarter. Its net interest income was Rs 6,184 crore, up 21%, and loans grew 30.1% to about Rs 3.47 lakh crore. Gross NPA improved to 1.32% and net NPA to 0.40%.
The bank's net interest margin slipped to 5.58% from 5.90%. The report attributes this mainly to growth in loans backed by FCNR(B) deposits, which are foreign-currency deposits from non-resident Indians, a business that grows the balance sheet at thinner margins. The report gives no microfinance-specific figures for IDFC First, so how much of its improvement comes from group loans is not shown.
IDFC First's margin is the figure to watch.
What management says and what could go wrong
Bandhan reports bank-wide collection efficiency of 99.4%, up 36 basis points from the previous quarter (a basis point is one-hundredth of a percentage point). It did flag weak spots: floods in four districts of Assam put Rs 406 crore of loans under moratorium, with an extra 5% provision, though management said over 96% of that book is standard. It also cited weather stress in several states, slower deposit growth than loan growth, and the draft cap on bancassurance commissions that could hurt fee income.
Bandhan also expects a one-time capital hit of about Rs 2,200 crore from moving to the expected-credit-loss provisioning model, which provides for losses earlier than the old method. Management says it will not touch profit, and the RBI allows five years to absorb it. IDFC First guides for its margin to recover to about 5.8% by the March quarter and for loan growth of at least 20%.
What is confirmed is the reported results. What is not is whether the recovery will hold through the coming quarters, especially if weather or flood stress spreads.
What it means for borrowers and lenders
For lenders, the quarter suggests that Bandhan's microfinance clean-up is working: the book has stopped shrinking and bad loans in it have fallen sharply, while the bank says it is still cautious. For borrowers in small-ticket group loans, a return to 8% to 10% growth could mean more credit being available, though management says growth will be careful.
Try the arithmetic with Bandhan's own figures.
What to watch next
Watch Bandhan's EEB growth and collection numbers in the December quarter, flood-hit districts' repayments, the final bancassurance commission rules, and the ECL transition details for banks.
Key takeaways
- Bandhan Bank's Q2 FY27 profit rose 455.7% to about Rs 620 crore, and IDFC First's rose 196.5% to Rs 1,045 crore.
- Bandhan's gross NPA fell to 3.1% from 5.0% and its microfinance book's bad loans to 6.0% from 9.6%.
- IDFC First's margin fell to 5.58% as FCNR(B)-backed loans grew, even as gross NPA improved to 1.32%.
- Bandhan guides to 8% to 10% microfinance growth in coming quarters, but flags floods, weather and fee-income risks.
- These are company-reported figures, and the true test is the next two quarters.
Sources
- [Investing.com: Bandhan Bank Q2FY27 slides, profit surges 5.5x as asset quality improves](https://www.investing.com/news/company-news/bandhan-bank-q2fy27-slides-profit-surges-55x-as-asset-quality-improves-93CH-4979456)
- [Investing.com: Earnings call transcript, Bandhan Bank posts stronger Q2 2027 profit](https://www.investing.com/news/transcripts/earnings-call-transcript-bandhan-bank-posts-stronger-q2-2027-profit-shares-rise-93CH-4979354)
- [Investing.com India: IDFC First Bank Q2 FY27 slides, profit crosses Rs 1,000 crore](https://in.investing.com/news/stock-market-news/idfc-first-bank-q2-fy27-slides-profit-crosses-rs-1000-cr-milestone-93CH-5652623)
Tags: Bandhan Bank IDFC First Bank Microfinance Asset quality Quarterly results