Provisions increased 186% year-on-year (y-o-y) and 86% sequentially to Rs 1,426 crore. Operating profit of the lender increased 17% y-o-y to Rs 807 crore, but declined 8% sequentially.
RBL Bank on Monday reported a net loss of Rs 459 crore in the quarter ended June 2021 due to a threefold rise in provisioning. The bank had reported a net profit of Rs 141 crore in the corresponding quarter last year.
Provisions increased 186% year-on-year (y-o-y) and 86% sequentially to Rs 1,426 crore. Operating profit of the lender increased 17% y-o-y to Rs 807 crore, but declined 8% sequentially. Although the bank’s net interest income (NII) fell 7% y-o-y to Rs 970 crore, the lender had support from rise in other income. Non-interest income surged 109% y-o-y to Rs 695 crore, which included Rs 562 crore of fee income. Net interest margins (NIM) declined 49 basis points (bps) y-o-y to 4.36%, but improved 19 bps sequentially.
Vishwavir Ahuja, MD & CEO, RBL Bank, said, “While our revenues and operating profits have held up well and continue to grow year on year, the effect of the second wave of the Covid-19 pandemic on our asset quality was rather severe and different from the first wave given the nature of our businesses, despite the planned counter-cyclicality in our business mix.”
The lender saw a rise in bad loans during the June quarter. Its gross non-performing assets (NPA) ratio increased 65 basis points to 4.99%, compared to 4.34% in the previous quarter. However, the net NPA ratio improved 11 basis points to 2.01% from 2.12% in the March quarter. The lender has strengthened its balance sheet by increasing provision coverage ratio by 580 basis points to 76.3% in June 2021.
“We have decided to take a firm view and clear the decks for the future, by taking accelerated or more than adequate provisions, preparing the bank to return to normalised levels of business, provisioning, growth and profitability. We expect return on assets of 1%, when we exit Q4 of FY22,” Ahuja said.
The cost-to-income ratio of the bank increased by 70 basis points y-o-y to 51.5% during Q1FY22. Advances remained flat at Rs 56,527 crore. While the retail loans grew 7% y-o-y to Rs 32,071 crore, wholesale advances declined 9% y-o-y to Rs 24,456 crore.
Deposits grew 21% y-o-y and 2% sequentially to Rs 74,471 crore. Current account savings account deposits grew 35% y-o-y and 8% quarter-on-quarter to Rs 25,071 crore.
The capital adequacy ratio improved 80 basis points y-o-y to 17.2% during the June quarter, compared to 16.4% as on June 30, 2020.