RBL Bank Q2 net profit plummets 78% as asset quality slides

Private sector lender RBL Bank on Thursday reported a 78 per cent decline in its September quarter net profit at Rs 31 crore on a jump in asset quality issues but guided towards a better second half with better ratios.

Its managing director and chief executive Vishwavir Ahuja said the stress that has played out is better than what it had expected and guided towards. The fresh slippages came at Rs 1,217 crore with a bulk of them coming from the microfinance book and the credit card portfolio, which had been impacted because of the second wave.

The gross non-performing assets ratio increased to 5.40 per cent from the year-ago period's 3.34 per cent and 4.99 per cent in the quarter-ago period.

"We have crossed a hump this quarter. The GNPAs have peaked and will be trending down from here on. We expect the credit costs in the second half of the fiscal to be half of what we observed in the first," Ahuja told reporters.

The overall provisions jumped to Rs 651 crore from Rs 487 crore in the year-ago period and the preceding quarter's Rs 1,384 crore.

The bank, which has 3 per cent of assets under recast packages, is confident of handling the stress and will also be improving the provision coverage ratio to 65 per cent from the present 62 per cent.

The core net interest income declined 2 per cent to Rs 915 crore as there was an interest reversal of Rs 130 crore charged previously to retail accounts which subsequently led to the net interest margin also narrowing to 4.07 per cent, while the overall loans are flat.

The non-interest income jumped 42 per cent to Rs 593 crore on a fee income growth and Ahuja hoped will do well as the credit card issuances get restarted after an impact because of the restrictions on Mastercard.

Ahuja said credit growth is picking up now across segments and the bank will close FY'22 with advances growth of 7-8 per cent. Wholesale book has grown by 4 per cent in October alone, while the improvement of collection efficiencies has led to restart micro-loan disbursements, he said, adding that retail mainstay of credit card has seen 2 lakh new cards being issued in October.

He also announced that the bank has decided to limit the overall microfinance exposure to under 10 per cent of the overall book from the earlier 15 per cent level which is a learning from the present crisis.

The bank scrip closed 3.10 per cent down at Rs 201.40 apiece on the BSE on Thursday, as against a correction of 1.89 per cent on the benchmark.