RBL Bank Q3 net up 6% to Rs 156 cr on lower provisions, robust NII

Profit number beats Bloomberg estimate of Rs 75.7 crore. Sequentially net profit was up 5x

Private sector lender RBL Bank’s net profit jumped six per cent to Rs 156.10 crore in the October–December quarter (Q3FY22), aided by lower provisions and healthy growth in net interest income (NII). Net profit in the reporting quarter beat street estimates as analysts at Bloomberg had estimated a net profit of Rs 75.7 crore. Sequentially net profit jumped 5 times as the bank had reported Rs 30 crore as net profit in Q2FY22 due to higher provisions.

NII, the difference between interest earned and interest expended, of the bank grew 11 per cent year-on-year (YoY) to Rs 1,010 crore in Q3FY22 while other income rose 8 per cent to Rs 620 crore in the same period. Net interest margin (NIM), a measure of profitability, stood at 4.34 per cent as against 4.06 per cent in the preceding quarter.

Provisions of the lender fell 30 per cent on a YoY basis and 35 per cent sequentially to Rs 423.88 crore in the Q3FY22. The bank is still holding additional Covid related provision to the tune of Rs 134 crore.

Asset quality of the lender also improved sequentially as gross non-performing assets (NPAs) ratio fell 56 basis points to 4.84 per cent at the end of December quarter as against 5.40 per cent at the end of September quarter. Similarly, net NPAs dropped 29 bps to 1.85 per cent during the same period. Gross slippages of the lender fell 37 per cent sequentially to Rs 766 crore as against Rs. 1,217 crore for Q2FY22.

The bank has restructured loans worth Rs 673.98 crore under Reserve Bank of India’s second covid restructuring scheme.

Advances of the lender has grown by 4 per cent sequentially and 3 per cent YoY to Rs 58,141 crore at the end of December quarter. The wholesale portfolio of the bank grew 16 per cent YoY to Rs 27,241 crore whereas the retail portfolio de grew 6 per cent YoY to Rs 30,900 crore. In the retail portfolio, while the credit card segment grew 8 per cent the micro banking segment and business loans de-grew.  

“This has been a turnaround quarter as we have seen a sharp improvement in both profitability and asset quality. Our business and advances momentum are now firmly on a positive trajectory, and we expect this to continue with retail also returning to growth”, said Rajeev Ahuja, MD & CEO (Interim), RBL Bank.

“In a three-year time frame, retail segment would be 60 -65 per cent of the bank’s loan book. The idea is to do good business across our 5-6 chosen segments. Retail was growing till 2021 and then growth in the wholesale business picked up. Retail growth is again coming back and we expect in the next few quarters its growth will be far higher”, Ahuja said.

Deposits of the bank dipped 3 per cent sequentially to Rs 73,639 crore at the end of December quarter. There was an outflow of deposits in the last week of December because of RBI’s sudden decision to appoint an additional director on the bank’s board and the erstwhile MD&CEO Vishwavir Ahuja went on "medical leave".

“We did see outflow of deposits in the last week of December and we stabilised very quickly and we are back and higher than our December levels. We had 10 days of flutter but recovered very quickly”, Ahuja said.

Commenting on the issue of identifying a new CEO for the bank, Ahuja said, “The board is treating this matter in an expeditious manner”. The bank has formed a search committee to identify candidates for the post of MD and CEO from within and outside the bank.