RBL Bank Q3 Results: Net Profit Rises 6% On Higher Income, Lower Provisions

RBL Bank Ltd.'s third-quarter profit rose on higher income and lower provisions.

The profit lender's net profit rose 6.1% year-on-year to Rs 156.1 crore in the quarter ended December, according to its exchange filing. Analysts tracked by Bloomberg had estimated a net profit of Rs 75.7 crore.

Net interest income increased 11.2% over the preceding year to Rs 1,010.4 crore. Net interest margin improved to 4.34% from 4.06% a quarter ago.

Asset Quality

The bank's asset quality improved with the gross non-performing asset ratio at 4.84%, compared with 5.40% in the prior quarter. Net NPA ratio, too, fell to 1.85% as of December-end from 2.14% three months earlier.

Provisions for the quarter stood at Rs 423.9 crore, down 30% from a year earlier.

• Gross slippages dropped 37% quarter-on-quarter to Rs. 766 crore.

• The bank has Rs 674 crore in exposure to accounts restructured under Covid 2.0 scheme.

• Net restructured advances to net advances dropped 35 basis points quarter-on-quarter to 3.00%.

• Provision coverage ratio, including technical write-offs, stood at 78.61%.

Deposits & Advances

The lender, which saw chief executive Vishwavir Ahuja exit abruptly and a Reserve Bank of India director appointed to the board during the quarter, saw a dip in deposits and a small rise in advances.

• Advances were up 4% quarter-on-quarter

• Deposits were down 3% quarter-on-quarter

• Current account, savings account deposits dropped 5% quarter-on-quarter. The bank's CASA ratio is at 34.4%.

The bank's capital adequacy position remains strong at 16.6%.

"We have restarted out microfinance and small business lending businesses. We are expecting to grow our loan book by 5-7% this fiscal. In the coming three years, we should grow at plus plus of what the industry is growing," said Rajeev Ahuja, interim MD & CEO at RBL Bank.

The growth momentum on the bank's wholesale lending business has also resumed, he said.

The bank had seen an outflow of deposits in the last week of December, which has now stabilised, Ahuja said. RBL Bank's current deposit base is now higher than where it was on Dec. 24, 2021, he said.

Leadership Change

On Dec 24, RBL Bank announced to the exchanges that Vishwavir Ahuja, its then managing director and chief executive officer, had decided to exit the bank on medical grounds, leading to a change in leadership. The bank also said that the Reserve Bank of India had appointed a nominee director on RBL Bank's board.

"We have now moved past these issues," Rajeev Ahuja said.

A committee formed by the bank, guided by external expert Pradip Shah and executive search firm Egon Zehnder is in the process of identifying a permanent chief executive officer.

"The board is treating this matter in an expeditious manner," Ahuja said, without clarifying on the timeline for such an appointment.