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Informist, Saturday, Oct. 19, 2024

 

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-- Net profit INR 2.23 bln vs INR 2.94 bln year ago 
-- Total income INR 44.58 bln vs INR 37.12 bln year ago 
-- Apr-Sept net profit INR 5.94 bln vs INR 5.82 bln year ago 
-- Apr-Sept total income INR 87.60 bln vs INR 72.54 bln year ago 
-- Provisions INR 6.18 bln vs INR 6.40 bln year ago 
-- Gross NPA ratio 2.88% as on Sept. 30 vs 2.69% qtr ago 
-- Net NPA ratio 0.79% as on Sept. 30 vs 0.74% qtr ago
-- Basel III capital adequacy ratio 15.39% as on Sept. 30 
-- Transferred credit card loans worth INR 4.7 bln to ARC
-- Net interest income INR 16.15 bln, up 9% on year 
-- Net interest margin at 5.04% 
-- Total deposits INR 1.08 tln as on Sept 30, up 20% on yr 
-- Current, savings account ratio 33.6% as on Sept 30 
-- Net advances INR 878.82 bln as on Sept 30, up 15% on yr 
-- Provision coverage ratio 72.98% as on Sept 30 
-- RBL Bank MD: Remain mindful of certain near-term challenges

  

By Christina Titus

 

MUMBAI – RBL Bank's net profit for the Jul-Sept quarter missed analysts' expectations and fell 24.3% on year to INR 2.23 billion due to a sharp rise in the bank's expenses and contraction in the net interest margin. The bank reported a 25% on-year increase in interest expenses and a 24.20% increase in its employee costs. 

 

On a sequential basis, the bank's net profit fell 40.1%. Analysts had expected the bank's net profit to decline 18.6% on a sequential basis, but rise 2.9% on year to INR 3.03 billion for the quarter.

 

The bank's net interest income grew only 9% on year to INR 16.15 billion due to interest reversals from slippages and lower disbursals in microfinance. As a result, net interest margin contracted sharply to 5.04% for Jul-Sept from 5.67% a quarter ago and 5.54% a year ago.

 

Total expenditure excluding provisions and contingencies rose 19% on year to INR 35.48 billion during the quarter. Operating expenses grew 12.7% on year to INR 16.32 billion for the quarter. The total income of the bank stood at INR 44.58 billion during the quarter, up 20.1%, of which interest income rose 17.4% on year to INR 35.31 billion.

 

The gross non-performing asset ratio of the bank was 2.88% as of Sept. 30 compared to 3.12% a year ago and 2.69% a quarter ago. The net non-performing ratio was 0.79% compared to 0.78% a year ago and 0.74% a quarter ago. The provisions of the bank were INR 6.18 billion during the quarter, down 3.4% on year.  

 

Advances grew 15% on year to INR 878.82 billion as on Sept. 30. Of which, retail advances rose 24% on year to INR 547.23 billion whereas wholesale advances increased just 3% to INR 331.60 billion for the period. The retail-wholesale mix within advances stood at 62:38.

 

Within retail advances, microfinance and credit card loan segment majorly impacted the net interest margin. The microfinance loan segment saw a 3% on-year rise to INR 69.71 billion in the quarter, whereas it declined by 4% sequentially. Credit card loans rose 17% on year to INR 175.38 billion. However, the card segment had marginal growth sequentially at 1%. 

 

The bank said in its post-earnings media call that delinquencies from the microfinance segment are an industry-wide issue. However, it expects the situation to improve further, led by recent guidelines issued by the Microfinance Industry Network.

 

"The good part is that we are now seeing MFin having come out with guidelines. Most players, most material players, have implemented the new guardrails around the number of lenders and overall indebtedness sometime in September," the bank said. 

 

On other hand, deposit growth outpaced the credit growth at 20% to INR 1.08 trillion for the Jul-Sept quarter, led by granular deposits. The share of granular deposits in overall deposits grew by 22% on year to INR 522.23 billion. This accounts for 48.4% of total deposits. Granular deposits are deposits less than INR 30 million. The current and savings account ratio was 33.6% as on Sept. 30 compared to 32.6% a quarter ago. 

 

Fresh slippages rose INR 10.26 billion for Jul-Sept from INR 7.20 billion a quarter ago and INR 5.41 billion a year ago. The bank's recoveries were INR 1.08 billion, as against INR 1.26 billion a quarter ago and INR 1.13 billion a year ago.

 

Among fresh slippages, 65-70% was from credit cards and 30% from the microfinance segment, the bank said in the post-earnings call. "We will see an increase in slippages in the microfinance segment in the coming quarter." It further said on credit cards that the transition that took place on collection of credit cards from co-branded partners to us caused pain to the portfolio and therefore expect the slippages to come down.

 

The capital adequacy ratio of the bank improved to 15.39% from 15.23% a quarter ago. The bank said that it is well capitalised for medium term growth.

 

For the half year ended September, the bank saw a net profit of INR 5.94 billion compared to INR 5.82 billion in the year ago period. For Apr-Sept, total income of the bank rose to INR 87.60 billion compared to INR 72.54 billion last year. 

 

During the quarter, the bank wrote off 74,405 credit card accounts with an aggregate outstanding of INR 4.7 billion and transferred to an asset reconstruction company, it said in the quarterly results. The provision coverage ratio was at 72.98% as on Sept. 30. Talking about the challenges in terms of asset quality, the managing director of the bank said in a press release that they remained mindful of near-term challenges. On Friday, shares of the bank ended 1.4% higher at INR 205.26 on the National Stock Exchange.  End

 

Edited by Akul Nishant Akhoury

 

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