RBL Bank Q1 net profit declines 47 pc to Rs 141 cr on higher provisioning

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Published: July 28, 2020 6:13 PM

The bank has only one subsidiary company -- RBL FinServe Ltd -- which accounts for 661 business correspondent branches.

Provisioning for bad loans and contingencies more than doubled to Rs 500.16 crore from Rs 196.95 crore in June quarter of 2019-20.Provisioning for bad loans and contingencies more than doubled to Rs 500.16 crore from Rs 196.95 crore in June quarter of 2019-20.

RBL Bank on Tuesday reported over 47 per cent decline in standalone net profit at Rs 141.22 crore in the first quarter ended June of the current fiscal year due to over two-fold jump in provisioning.

The private sector bank had posted a net profit of Rs 267.05 crore in June quarter of preceding fiscal year ended March 2020, it said in a regulatory filing.

However, the bank’s total income rose slightly to Rs 2,568.32 crore in April-June quarter of 2020-21 from Rs 2,503.88 crore in the year-ago quarter.

Provisioning for bad loans and contingencies more than doubled to Rs 500.16 crore from Rs 196.95 crore in June quarter of 2019-20.

The bank reported a substantial spike in its gross non-performing assets (NPAs) or bad loans, which stood at 3.45 per cent of gross loans as on June 30, 2020 as against 1.38 per cent a year ago.

Net NPAs also deteriorated to 1.65 per cent from 0.65 per cent.

In absolute terms, gross NPAs stood at Rs 1,992.07 crore at the end of first quarter of FY21 as against Rs 789.21 crore a year ago. Net NPAs rose to Rs 932.68 crore from Rs 371.64 crore.

On coronavirus pandemic and its impact, the bank said the continued slowdown has resulted in lower loan originations, trade and forex transactions, sale of third party products, use of credit and debit card by customers and efficiency in collection efforts.

“The continued slowdown is likely to increase customer defaults, requiring the bank to increase credit related provisions,” RBL Bank said.

On a consolidated basis, the bank’s net profit fell 42 per cent to Rs 154.42 crore during June 2020 quarter as against Rs 265.42 crore a year ago.

Income rose to Rs 2,654.88 crore from Rs 2,566.86 crore in the year-ago quarter.

The bank has only one subsidiary company — RBL FinServe Ltd — which accounts for 661 business correspondent branches.

RBL Bank said it made COVID-19 related provisions of Rs 240 crore in Q1FY21 and total cumulative provisions of Rs 350 crore in Q4FY20 and Q1FY21.

The bank’s advances were almost flat from a year ago at Rs 56,683 crore as on June 30.

While non-wholesale advances grew by 24 per cent year-on-year, wholesale advances came down by 18 per cent, in line with the bank’s planned portfolio re-calibration.

Non-wholesale advances accounted for 53 per cent of net advances of the bank, it added.

On liquidity, the private sector lender said its overall capital adequacy ratio stood at 16.35 per cent, with common equity tier I ratio of 15.16 per cent at the end of June 2020.

Average liquidity coverage ratio was at 164 per cent for the quarter, and current surplus liquidity was at Rs 13,600 crore, RBL Bank said.

“The quarter was a mixed bag. While on one hand, rising infection rates added to uncertainty, on the other hand, as we transitioned to unlocking in large parts of the country we saw business activity pick up sharply in the second half of the quarter,” RBL Bank MD and CEO Vishwavir Ahuja said.

“As a bank, we have achieved a robust set of numbers in this challenging business environment. We will continue to maintain surplus liquidity, high capital levels and tight risk filters in the near term,” he added.

Shares of the bank on Tuesday closed 1.71 per cent higher at Rs 181.85 apiece on the BSE.

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