RBL Bank Q3 Results: Sharp Drop In Profit On Higher Bad Loans
RBL Bank Ltd.’s quarterly profit fell sharply in the third quarter of the current financial year, as the lender saw a rise in bad loans and provisions.
Net profit fell 69 percent year-on-year to Rs 69.9 crore in the quarter ended December, according to the bank’s exchange filing. The drop in profits was a little steeper than anticipated. Analysts had pegged the bank’s net profit at Rs 86.4 crore.
Net interest income, or core income of the bank, rose 41 percent to Rs 923 crore, compared with an estimate of Rs 902 crore. Advances rose 20 percent over a year ago, while deposits increased 21 percent.
Asset Quality Pressures
The lenders, which saw a surprise weakness in asset quality earlier this year, continued to see bad loans and provisions rise.
RBL Bank’s gross non performing assets ratio rose to 3.33 percent in the December ended quarter compared to 2.6 percent in the previous quarter. Net non performing assets rose to 2.07 percent compared to 1.56 percent a quarter ago.
In absolute terms, the bank saw a 31 percent addition to bad loans, which stand at Rs 2010 crore. Slippages, which reflects loans turning bad during the quarter, eased marginally to Rs 1048 crore in the third quarter compared to Rs 1377 crore in the second quarter.
Provisions against bad loans surged.
In the third quarter, the bank set aside Rs 638.29 crore against bad loans compared to Rs 533 crore in the previous quarter. The bank’s provision coverage ratio stands at 58.07 percent, lower than the 68 percent a year ago.
Growth In Loan Book
The bank’s total advances stood at Rs 59,635 crore in Q3 FY20 compared to Rs 49,892 crore a year ago.
Wholesale loan assets make up 49 percent of the banks’ loan book and rose by 3 percent year-on -year to Rs 29,290 crore as of the end of December 2019. The banks’ retail loans increased 42 percent year-on-year to Rs 30,345 crore, mainly due to growth in credit cards, micro finance, small business loans and loans against property.