RBL Bank Q3 net slips 17%; net interest income up 0.10% to Rs 1,010 cr

Private sector lender RBL Bank on Thursday reported a 17.20 per cent dip in its December quarter net at Rs 121.61 crore on slower loan growth and a rise in operating expenses.

The city-headquartered bank, which had witnessed RBI appointing an additional director last month which was followed by its long-standing head Vishwavir Ahuja proceeding on leave, however, sought to allay fears, terming October-December as a "turnaround" quarter.

Rajeev Ahuja, the interim chief executive and managing director, said the performance across businesses is looking good and the fourth quarter of FY22 and the time ahead will see it deliver better performance.

He further said the bank had suffered challenges because of the second wave of COVID-19, and pointed to the September quarter's post tax profit of Rs 97.2 crore to assert that the third quarter has been a turnaround one and things are expected to improve.

Troubles on the credit card front -- where excessive concentration was flagged as a concern -- are behind, while microfinance and small business lending will also hit its trough in Q4, Ahuja said.

In the reporting quarter, the bank reported an overall credit growth of 3 per cent, with a 6 per cent decline in retail advances and a 16 per cent jump in wholesale advances, about which it was circumspect for over a year because of loan reversals in the past.

The net interest income grew 0.10 per cent to Rs 1,010 crore on a 0.15 per cent expansion in the net interest margin to 4.34 per cent and the advances growth.

Other income grew to Rs 620 crore from the year-ago period's Rs 570 crore.

The operating expenses grew 44 per cent to Rs 1,460 crore which hurt the bottomline for the quarter.

The management attributed it to a jump in expenditure on credit card sales (it sold a record 6 lakh cards), branch expansion (90 branches added since September, taking the total to 500) and also spends on technology.

Ahuja said the first two quarters were an aberration and operating expenses will normalise at these levels from here on.

He said there was pressure on deposits in the last week of December following the RBI action, but added that the central bank's statement on the strength of the franchise helped, and things are better now.

On the search process for a new CEO and MD, Ahuja said a newly-appointed panel consisting of board members and subject experts is working expeditiously.

He said there has been no material change since the RBI action and it is business as usual for the lender, asserting that it maintains the guidance of credit cost in the second half of FY22 being nearly half of that in the first half of the fiscal.

The bank also maintained the 5-7 per cent credit growth guidance for FY22 and added that the next three fiscals will witness it growing faster than the industry.

Ahuja said the share of retail, which has dipped to 53 per cent now, can grow till 65 per cent in three years.

The bank's overall capital adequacy stands at 16.6 per cent, with the core tier-I ratio at a comfortable 15.8 per cent, Ahuja said.

Its scrip closed 6.42 per cent up ahead of the announcement of earnings at Rs 153.25 apiece on the BSE, as against a 1 per cent correction on the benchmark.