RBL Bank back in black in June quarter; new head says NPA not a concern

Private sector lender RBL Bank on Thursday reported a consolidated net profit of Rs 208.66 crore in the June quarter as against a loss of Rs 462.25 crore in the year-ago period.

The city-based lender had reported a net profit of Rs 164.77 crore in the preceding March quarter. On a standalone basis, its post tax profit came at Rs 201.16 crore for the reporting quarter.

Its core net interest income increased by 6 per cent to Rs 1,028 crore on a 7 per cent growth in advances and the Net Interest Margin (NIM) being at the stable 4.36 per cent. The NIM, however, contracted when compared with 5.04 per cent registered in the March quarter.

The bank's other income dropped 6 per cent to Rs 614 crore as a result of reverses on the treasury operations due to hardening of yields.

The bank, which faced difficulties with asset quality a few years ago and also exit of a chief executive and managing director recently leading to further concerns, reported an improvement in the gross non performing assets ratio to 4.08 per cent in June from 4.40 per cent in March.

Its new MD and CEO R Subramaniakumar said asset quality is showing an improving trend and the same will continue through the year. "I hope it lays to rest any concerns...It will be business as usual on NPAs from now," he told reporters.

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The bank's overall provisions stood at Rs 253 crore for the reporting quarter, as against Rs 1,384 crore for the year-ago period. The credit cost for FY23 will be "sharply lower" and come at half of the one in FY22, he added.

Subramaniakumar said the bank consciously slowed down its microlending during the quarter because it had to adopt to changed regulatory guidelines and added that this slowed down the overall retail disbursements to Rs 700 crore.

The new retail loans will come at three times of Rs 700 crore in the second quarter, he said, adding that the bank wants to get into other segments by launching products in vehicle finance, housing finance and small business lending.

The bank wants to leverage on its existing strengths and infrastructure to expand its business over the next 2-3 years, the new chief said.

The bank's overall capital adequacy stood at 17.27 per cent as of June, and it does not forsee any new capital raising for up to next two years, Subramaniakumar said.

During the reporting quarter, it saw wholesale advances climbing up 22 per cent, which included giving loans to clients who had ceased to be on the bank's list after the 2019 consolidation exercise and those who have recovered from the reverses of COVID, executives said.

This has taken the overall composition of wholesale advances in the book to 51 per cent with the rest occupied by retail, and the bank will seek to increase retail's contribution going ahead, Subramaniakumar said.

The RBL Bank scrip gained 4.05 per cent to close at Rs 94.95 a piece on the BSE, as against gains of 0.51 per cent on the benchmark.