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Informist, Friday, Oct. 17, 2025

By Arya S. Biju

MUMBAI – RBL Bank Ltd. is expected to report an on-year fall in its net profit for the fifth consecutive quarter in Jul-Sept. However the mid-single digit fall seen in the reporting quarter will be the lowest compared to the trailing four quarters. Growth in business, an uptick in the net interest margin, and likely improvement in asset quality are expected to support the company's earnings in the reporting quarter, analysts said.

The bank's net profit for the reporting quarter is expected to fall nearly 6% on year to INR 2.09 billion, according to the average of estimates from six brokerages. However, on a sequential basis, its net profit is expected to rise 4.5%. The highest estimate for the bank's net profit is INR 2.54 billion from Emkay Global Financial Services Ltd. and the lowest estimate of INR 1.60 billion is from YES Securities (India) Ltd. 

Some analysts expect the bank's asset quality to have improved on a sequential basis in the September quarter. While Motilal Oswal Financial Services Ltd. expects the bank's asset quality ratios to remain broadly stable, Nuvama Wealth Management Ltd. expects the bank to outperform other smaller private banks in terms of improvement in asset quality. In July, the bank had said that it would likely see a recovery in growth and improvement in asset quality in the second half of the current financial year. 

The stress in unsecured segments, including microfinance, personal loan, and credit cards, which has largely peaked is now expected to ease from the September quarter, Emkay Global said. The brokerage also expects the bank's credit cost to remain contained. 

Analysts are divided on how the bank will fare in terms of slippages. Emkay Global expects lower stress in cards and microfinance segments to drive down slippages during the latest quarter. ICICI Securities and Yes securities, on the other hand, expect the bank's slippages to rise sequentially. The growth in slippages is, however, expected to be lower than the previous quarter, Yes securities said. Higher slippages have been weighing on the bank's profit for almost a year now. 

The bank's net interest income for the September quarter is expected to grow nearly 3% on quarter but fall nearly 6% on year to INR 15.23 billion, the average of estimates showed. The highest estimate of INR 15.42 billion for the company's net interest income is from ICICI Securities Ltd. and the lowest estimate of INR 14.92 billion is from Nirmal Bang Equities Pvt. Ltd.

While the lender's net interest margin for the quarter is widely expected to remain steady from the previous quarter, Motilal Oswal expects it to improve slightly. ICICI Securities expects RBL bank's net interest margin to remain flattish or increase slightly, it said in a note. "While we may see some small improvement (in margins) in Q2 (Jul-Sept), we will start seeing reasonable improvement starting Q3 (Oct-Dec) onward," R. Subramaniakumar, chief executive officer and managing director of the bank, had said in a conference call post the June quarter earnings. 

When it comes to provisions, Motilal Oswal expects these to remain steady on quarter. Yes securities, on the other hand, expects them to be lower than the previous quarter. 

For the June quarter, RBL Bank's net profit had fallen 46% on year of INR 2.00 billion as net slippages rose to INR 9.18 billion from INR 7.30 billion in the preceding quarter. As of Jun. 30, the bank's gross non-performing assets ratio continued to trend higher at 2.78%, compared to 2.60% a quarter ago. Its net non-performing assets ratio was also higher at 0.45% as of Jun. 30 against 0.29% a quarter ago.

Decline in core and net interest income also dented the company's net profit in the June quarter. Net interest income for the quarter had fallen 13% on year to INR 14.81 billion. The bank's net interest margin was 4.50% in Apr-Jun, down from 4.89% a quarter ago.

Of the 14 research reports on the bank available with Informist, nine have a 'buy' or equivalent rating on the stock with an average target price of INR 263. Of the remaining five, one has a 'hold' rating with a target price of INR 290 and the others have a 'sell' or equivalent rating with an average target price of INR 214. 

On Friday, shares of the company ended over 2% lower at INR 299.50 on the National Stock Exchange. The stock has risen over 11% since the announcement of its June quarter earnings on Jul. 19.

Following are the Jul-Sept earnings estimates for RBL Bank from six brokerages in descending order of the estimate of net profit in INR million:
 

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Edited by Avishek Dutta

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