RBL Bank Q4 results: Private lender’s profit rises 37%; targets 20% credit growth in FY24

RBL Bank – a mis-cap private sector lender – on Saturday reported a 37 per cent growth in the March 2023 quarter net profit to Rs 271 crore on lower provisions.

For the entire FY23, the bank posted a net profit of Rs 883 crore against a loss of Rs 75 crore in the year-ago period, which also witnessed a management change at the firm after regulatory actions.

In the reporting quarter ended March 31, its core net interest income grew 7 per cent to Rs 1,211 crore on the back of a 17 per cent rise in advances and a marginal widening in the net interest margin at 5.04 per cent.

Its managing director and chief executive R Subramaniakumar explained that the NII growth has been limited because, in the year-ago period, it had to recognise a Rs 72 crore due on restructured loans in the interest income line on the recommendation of the auditors, which increased the base.

Excluding this item, the NII growth would have come at 12 per cent, he said.

The other income grew 32 per cent to Rs 674 crore for the quarter.

The bank is targeting a 20 per cent growth in overall advances in FY24, which will be aided by a 22 per cent growth to be achieved from the retail advances, he said, adding that over the next three years, it will increase the retail component to 60 per cent from the present 54 per cent.

A bulk of the growth in the retail advances will be coming from the secured advances, rather than the unsecured advances like credit cards, which was the reason for it coming under the regulatory lens.

Subramaniakumar said the bank has all the necessary products, including housing, loans against property and auto loans, in its bouquet right now, which will help in increasing the share of secured advances.

For the March quarter, its gross fresh slippages came at Rs 681 crore against Rs 619 crore in the year-ago period, but Subramaniakumar said a focus on recoveries helped limit the net slippages.

The gross non-performing assets ratio improved to 3.37 per cent from 4.40 per cent in the year-ago period and 3.61 per cent at the end of the preceding December quarter.

It set aside Rs 235 crore as provisions for the quarter, which was lower by 41 per cent, when compared to the year-ago period, and was a major factor aiding the profit growth.

The credit costs came at 1.49 per cent for the entire fiscal and Subramaniakumar said the bank is targeting to get the number between 1.5-2 per cent in FY24.

He said the bank has ‘bounced back’ courtesy of teamwork and management, and the board of the bank has achieved its task of helping the institution deliver to its true potential.

The bank's overall capital adequacy stood at 16.9 per cent as of March 31, with the core buffer at 15.3 per cent.