RBL Bank on Tuesday reported a 54.6% year-on-year (y-o-y) jump in net profit for the quarter ended March to Rs 130.13 crore on the back of a 46.6% rise in net interest income (NII) to Rs 352.16 crore. NII is the difference between interest earned and interest paid by a bank. The net interest margin (NIM) improved 12 basis points (bps) from the end of December to 3.52%. The growth in bottom line came despite a doubling in provisions, which was accompanied by a deterioration in asset quality. Gross non-performing assets (NPAs) at the bank rose 14 bps from the end of December to 1.2% of the loan book and net NPAs were up 12 bps at 0.64%. The bank’s credit cost for the quarter stood at 0.31%, compared with 0.14% in Q4FY16.
In a conference call with analysts and investors, Vishwavir Ahuja, managing director and CEO at the bank, attributed the rise in provisions to a regulatory directive. “We were required to recognise five accounts as NPAs. Of these five accounts, four were closed out and recovered immediately in the last fiscal year itself, which is (the year ended) March 2017,” Ahuja said.
The other account recognised as an NPA was in the corporate and investment banking segment, Ahuja said, adding that the value of this exposure is Rs 66 crore and the bank has set aside 50% of the amount in terms of provisions in the March quarter. RBL Bank’s net advances grew 38.7% y-o-y to Rs 29,449.04 crore by the end of March. Loan growth was uniform in the wholesale and retail segments.
The wholesale portfolio grew 39%, while retail assets, development banking, and financial inclusion and agriculture together grew 38%. Low-cost current account savings account (CASA) deposits grew 67.5% y-o-y to Rs 34,588.09 crore and constituted 23.15% of all deposits as of March 31.
You might also want to see this:
The bank also saw a 65.8% y-o-y rise in non-interest income to Rs 236.55 crore and said it expects growth in fee income and other revenue streams to sustain. Ahuja said, “We have given a 2020 guidance, which is indicating a certain overall growth and the fact that 33% of our total income, or one-third of our total income will come from other income lines, I mean fee income. We are completely confident of maintaining that.”