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Informist, Friday, Jan. 16, 2026

By Anusha Vaidyanathan

MUMBAI – RBL Bank is expected to report a more than sixfold on-year increase in its net profit for the December quarter due to the effect of a low base from the year-ago quarter. In the year-ago quarter, the bank's total provisions had nearly doubled sequentially to INR 11.88 billion, of which INR 4.14 billion was for its non-performing loans of the Joint Liability Group portfolio. In the year-ago quarter, as the bank's provisions grew nearly twofold, its net profit had fallen 85% sequentially.

RBL Bank is expected to post a net profit of INR 2.38 billion for the December quarter, according to the average of estimates by six brokerages. This would be a rise of 630% on year and 33% sequentially. The highest estimate for net profit for the bank is INR 3.10 billion by Nirmal Bang Equities Pvt. Ltd. and the lowest estimate is slightly below INR 2 billion from Elara Securities (India) Pvt. Ltd.

RBL is also expected to post a higher net profit on the back of improvement in its asset quality, Emkay Global Financial Services Ltd. said. The impact of the implementation of the new labour code, provisions on projects under implementation, and moratorium on micro, small, and medium enterprises loans in the December quarter need to be watched for the entire banking sector, the brokerage said.

The brokerage also said banks engaged in project financing are required to make a 1.0-1.25% standard asset provisioning from Oct. 1, 2025 on projects under implementation, which could increase the provisioning, but added that the overall impact of this is expected to be limited.  Given the receding stress in unsecured retail loans and a healthy provisioning coverage ratio build-up for most banks, the incremental costs for lenders should be lower sequentially, and this could support profitability.

The bank's net interest income is estimated at INR 16.41 billion, per the average of estimates. This is a rise of nearly 6% sequentially and 3.5% on year. The highest estimate for the bank's net interest income is INR 18.30 billion by Nirmal Bang Equities Pvt. Ltd. and the lowest estimate is INR 15.29 billion by Elara Securities. For RBL, net interest income growth is expected to be lower than average loan growth due to a fall in yield on advances outpacing the fall in the cost of deposits, according to YES Securities. Consequently, the net interest margin is expected to be lower sequentially, YES Securities noted.

Brokerages are divided over how the net interest margin will move for the sector and individual banks. Three brokerages expect RBL's net interest margin to stay stable or see a slight dip on year after it fell noticeably in the sequential quarter. This could be partly because of the interest rate cuts and cut in banks' cash reserves effected by the Reserve Bank of India. Some improvement in the current account-savings account ratio will also boost the bank's net interest margin, Emkay Global said.

RBL is expected to see only a slight uptick in its NIM on year, likely moving to 4.6% from 4.5%, according to ICICI Securities. Sequentially, the bank's NIM could go up 65 basis points to 5%, according to Nirmal Bang.

Given that the banking system is under a liquidity stress, Emkay Global expects RBL's deposits to rise 12.1% on-year to INR 1.20 trillion. The bank's loan growth is estimated at 12.8% on year. This growth is expected to be led by secured and commercial loans and by a contained decline in loans to microfinance institutions, according to Motilal Oswal.

Banks are likely to see slippages in their loan quality but at a moderate rate; but, they may see seasonally higher agri-slippages, Emkay Global said in a note. However, continued strong corporate recovery, write-offs, and an improving credit growth could lead to a reduction in the overall gross non-performing assets ratio, the brokerage said. RBL Bank's gross non-performing assets ratio is expected to fall to 2% from 2.3% sequentially, according to ICICI Securities.

The bank's pre-provision operating profit is expected to grow sequentially even though it may fall strongly on year, according to three brokerages. The estimates for the bank's pre-provisioning operating profit varies widely and ICICI Securities expects it to grow 14% sequentially but fall 17% on year.

Emkay Global, on the other hand, estimates a 6.6% sequential growth and a 22% on-year fall. Nirmal Bang estimates the pre-provisioning operating profit will fall 4.6% on year but rise 30.6% sequentially. The only brokerage to estimate both on-year and sequential operating profit will fall is Elara Securities, which expects a 38.3% on-year fall and a 15.6% sequential fall.

Among the 15 research recommendations on RBL available with Informist, 11 have a "buy" recommendation on the stock, three have "sell" call while one has a "hold" call. The average target price of the "buy" recommendation is INR 304 and that of hold is INR 291 per share. These are both lower than the current market price of INR 312.

At 1119 IST, shares of RBL Bank traded 4.2% higher at INR 325.05 on the National Stock Exchange. The shares have fallen 2.54% since the bank announced its September quarter earnings. RBL Bank will announce its December quarter earnings on Saturday.

Following are the Oct-Dec 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 Deepshikha Bhardwaj

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