Private sector lender RBL Bank on Friday reported net profit for the third quarter of FY24 at Rs 233 crore, up 12% year-on-year, led by stable loan growth and asset quality. This was below a consensus estimate by Bloomberg analysts of Rs 316 crore.
On a sequential basis, however, RBL Bank’s profit was 21% lower as it made contingent provision of Rs 115 crore for its exposure to alternative investment funds (AIF). The Reserve Bank of India (RBI) had asked lenders to either wind down their position in AIFs that have a downstream investment in a borrower company, or make 100% provisions for such exposures.
RBL Bank’s investments in AIFs are primarily into venture debt funds which have been made over years for building way into new-age digital businesses, the bank’s management said, adding that the lender has worked with venture debt platforms for nearly 10 years and does not see any issue in realising principal and returns in the normal course.
“Against the investment value of Rs 115 crore (in venture funds), the current net asset value (NAV) is at Rs 161 crore. This provision is not against the impairment and can be redeemed,” they said.
Excluding contingent provision on AIF investments, the bank’s net profit grew 53% y-o-y and 9% sequentially to Rs 319 crore during Q3. The lender will in due course consider either maintaining or selling its exposure in AIFs in open market.
Business growth
RBL Bank’s overall advances rose 20% y-o-y to Rs 79,949 crore as of December-end. Retail loans, which accounted for Rs 46,371 crore, grew 33% on year while wholesale loans grew 6% to Rs 33,577 crore. The bank will grow its overall advances by over 20% going ahead, MD & CEO R. Subramaniakumar said in a post-earnings conference.
Overall deposits rose 13% y-o-y to Rs 92,746 crore as of December 31. Low-cost current account and savings account (CASA) ratio, however, moderated to 33.8% in Q3 from 35.7% last quarter. The bank will use its branch network, business correspondent touch points and direct selling agents, among other levers, to grow its retail deposit book moving ahead, the MD said.
Further, net interest income (NII) during Q3 stood at Rs 1,546 crore, up 21% y-o-y, whereas net interest margin (NIM) grew to 5.52% in Q3 from 5.27% in same period last year. The NIM will likely stay flattish during Q4, the MD said.
The bank’s asset quality improved with gross and net non-performing asset ratio (GNPA, NNPA) moderating 49 basis points (bps) and 39 bps y-o-y to 3.12% and 0.80% as of December 31, respectively.
Lastly, the RBI’s rise in risk weight on unsecured consumer credit has led to around 65 bps moderation in the bank’s capital adequacy ratio, the MD said. As of December 31, the lender’s capital adequacy ratio was 16.42%, with common-equity tier-I ratio of 14.58%. The bank does not foresee any capital raise requirement in the near to medium term, the MD said.
Shares of the bank ended trading 1.6% lower at Rs 265.70 apiece on BSE on Friday. The lender reported its earnings post market hours.