A Study on Profitability Trend Analysis – Bandhan Bank

Abstract

Profitability trend analysis is a fundamental tool for assessing the financial health, operational efficiency, and strategic sustainability of banking institutions. Bandhan Bank Limited, India’s youngest universal bank established in 2015 from the microfinance institution Bandhan Financial Services, presents a compelling case for profitability trend examination given its extraordinary growth trajectory, significant microfinance exposure, and resilience through the COVID-19 pandemic and subsequent asset quality challenges. This paper systematically analyzes the profitability trends of Bandhan Bank over the five-year period FY 2019–20 to FY 2023–24 using key financial ratios including Return on Assets (ROA), Return on Equity (ROE), Net Interest Margin (NIM), Net Profit Margin, Operating Profit Ratio, and Earnings Per Share (EPS). Secondary data sourced from Bandhan Bank’s audited annual reports and RBI statistical publications is analyzed using ratio analysis, trend analysis, and comparative financial benchmarking. Findings reveal that Bandhan Bank’s profitability experienced a sharp COVID-induced contraction in FY 2020–21 (ROA declining to 0.51%), followed by a robust recovery to ROA of 2.14% in FY 2023–24—its highest in the study period. Net Interest Margin remains among India’s highest for scheduled commercial banks at 7.83%, reflecting the bank’s high-yield microfinance asset base. However, elevated credit costs associated with the microfinance borrower segment remain the primary profitability risk requiring active management through portfolio diversification and enhanced collection infrastructure.