RBL Bank Expects Bad Loans To Rise Over Three Quarters On Corporate Exposures

RBL Bank Ltd. expects its asset quality to deteriorate over the next nine months due to stress in its corporate book even as its June quarter profit rose in line with estimates.

The lender’s bad loans could rise to 2.25-2.5 percent over the next three quarters and it could incur a 35-40-basis-point additional credit cost on account of corporate exposures, Managing Director and Chief Executive Officer Vishwavir Ahuja said at a press meet after announcing the results for the April-June period.

“We expect to face some challenges on some of our exposures in the near term,” he said. “But given the strong momentum in our businesses, we also expect to maintain a healthy profitable growth over the coming quarters.”

Ahuja, however, said there are no sectoral asset quality concerns. The watchlist of stressed accounts is 1.75 percent, according to him. Of this, he said, potential losses could be much lower.

According to Morgan Stanley, historically, the bank has seen higher bad loans in mid-corporate banking and agricultural segments, where it tried to take risk.

For the lender, wholesale banking forms 54 percent of the total advances and the non-wholesale book comprises 46 percent, according to its exchange filing.

Q1 Highlights

• Net interest income rose 48 percent year-on-year to Rs 817 crore.
• Profit increased 40.5 percent over last year to Rs 267 crore.
• Gross NPAs remained flat at 1.38 percent.
• Net NPAs fell to 0.65 percent from 0.69 percent sequentially.
• Provisioning rose 7 percent over the previous quarter to Rs 213 crore.

Watch the full video here: