RBL Bank tanks 15% on disappointing Q2 nos, stock down 37% from 52-wk high

Shares of RBL Bank plunged 15 per cent to Rs 172.10 on the BSE in Friday’s intra-day trade after the private sector lender reported a disappointing set of numbers, with profit after tax (PAT) down as much as 95 per cent year-on-year (YoY) at Rs 31 crore in September quarter (Q2FY22), due to higher provision and weak net interest income (NII). The bank had posted PAT of Rs 144 crore in Q2FY21 and a loss of Rs 459 crore in Q1FY22.

With today’s fall, the stock has corrected 37 per cent from its 52-week high level of Rs 274 touched on January 8, 2021. It had hit a 52-week low of Rs 155.65 on August 24, 2021.

In Q2FY22, the bank's NII de-grew 2 per cent YoY to Rs 915 crore, as net interest margin (NIM) contracted sharply by 30bp QoQ to 4.06 per cent. NIM stood at 4.36 per cent in Q1FY22 and 4.36 per cent in Q2FY21.

On the business front, loan growth remained muted at Rs 56,009 crore, affected by a sharp decline in Micro Banking and the Business loans portfolio, while growth in Wholesale portfolio and Credit Cards has picked up.

On the asset quality front, slippages were elevated largely from the Retail portfolio (Credit Cards/MFI). The gross non-performing assets (NPA) and net NPA ratio witnessed a deterioration, with GNPA/NNPA ratio increasing by 41bp/13bp QoQ to 5.4 per cent/2.14 per cent. In Q2FY21, GNPA and NNPA stood at 3.34 per cent and 1.38 per cent, respectively.

However, the management said the bank is confident of reverting to normalised levels of business, growth and profitability from the current (Q3) quarter itself and are on track to exit this financial year with strong profitability ratios setting us up well for FY23.

“RBL Bank reported a weak Q2FY22 on elevated provisions and tepid NII trends, which dragged growth in core operating profit. Margin contracted sharply (30bp) on account of a higher interest reversal,” Motilal Oswal Securities said in results update.

On the business front, loan growth remained muted, affected by a sharp decline in Micro Banking and the Business loan portfolio. However, Credit Cards showed a recovery as spends has picked up. On the asset quality front, slippages remain elevated, while the increase in restructured book was led by secured business loans and the micro banking portfolio. The management expects 2HFY22 to be better and the worst on asset quality to be behind it. We cut our earnings estimates and expect nil profit in FY22E, the brokerage firm said.