RBL Bank’s net profit for the quarter ended June was up 27% on year to Rs 253.7 crore, due to growth in the net interest income and improvement in asset quality.
The net interest income for the bank was up 12% on year to Rs 1,654.45 crore for the Apr-Jun quarter. However, it declined marginally on a sequential basis. Net interest margin (NIM) for the reporting quarter stood at 4.13% as against 4.41% a quarter ago. Other income declined by 10% on year to Rs 959.43 crore, mainly due to reduction in the large treasury income. “NIMs will go up and will be in the 4.80-4.90%,” R Subramaniakumar, managing director and CEO of the bank said in the post earnings media call.
Looking ahead, RBL Bank said it will focus on building a scalable, resilient and profitable franchise by strengthening its liability franchise and gradually narrowing the gap in cost of deposits with larger peers. The bank plans to accelerate growth in savings accounts, tap non-resident deposit flows through Emirates NBD’s international network, deepen relationships with large corporates and leverage trade corridors where the partner has a presence.
Loan Mix Realignment
The advances grew 23% on year to Rs 1.16 lakh crore as on June 30. Within which, wholesale advances grew by 38% on year to Rs 52,027 crore and retail advances grew 13% to Rs 64,196 crore. Unsecured retail advances grew by 8% on year to Rs 27,635 crore.
On the asset side, it aims to drive faster growth in secured retail products, including housing, gold and business loans, while improving profitability through better pricing, operating leverage and product optimisation across its existing customer base. On the loan growth guidance, the bank’s management said that they will continue to grow in the range of 20-25%.
Deposits for the bank grew 11% on year to 1.25 lakh crore as on June 30. The growth in current account and savings account (CASA) deposits was flat on a year-on-year basis and stood at Rs 36,468 crore. CASA ratio for the bank stood at 29.2%. The credit-deposit ratio stood 93.1% as on June 30. Following the Reserve Bank of India’s relaxation of FCNR(B) deposit norms, RBL Bank has mobilised $150 million through FCNR(B) deposits so far.
Asset Quality Dynamics
In terms of asset quality, the gross non-performing asset (NPA) ratio stood at 1.30% as on June 30 as against 1.45% a quarter ago. Net NPA ratio stood at 4.13% as against 4.41% a quarter ago. Fresh slippages during the reporting quarter inched up to Rs 940 crore from 925 crore a quarter ago, due to rise in slippages in the credit card and personal loans.
Provisions and contingencies inched up to Rs 599.3 crore in the reporting quarter as compared to Rs 442.32 crore as reported a year ago. However, on a sequential basis, it declined by nearly 12%. Provision coverage ratio stood at 72%. Credit cost for the reporting quarter stood at 54 basis points, lower than 65 bps a quarter ago.
On Friday, the shares of RBL Bank closed 1.5% higher at Rs 368.10 on BSE. The financial results were announced post market hours.