An RBL Bank signboard in Mumbai, India. (Source: BloombergQuint)

Q1 Results: RBL Bank Maintains Growth Guidance At 30-35%

RBL Bank Ltd.’s profit for the quarter-ended June met street estimates on the back of strong growth in advances from the retail and mid-corporate segments.

Net profit rose 34.8 percent from last year to Rs 190 crore, said the private lender in an exchange filing today. The bottomline was aided by a 36 percent growth in advances, with the wholesale loan book growing 31 percent and non-wholesale loan portfolio expanding 43 percent, on a yearly basis.

Net interest income, or the core income, of the bank grew 46 percent year-on-year to Rs 552.7 crore, beating the consensus forecast of Rs 532 crore.

The pace of growth will be maintained, said the lender while explaining that businesses like credit cards and mid-corporate lending are growing well.

We’ll maintain our growth guidance in the 30-35 percent range, with the profit on the upper end of the range.
Vishwavir Ahuja, Managing Director & Chief Executive Officer, RBL Bank

The bank’s net interest margin expanded to 4.04 percent in the April-June period as it managed to keep cost of funds in check despite a rising interest rate environment. A shift towards higher yielding businesses aided the move up in the net interest margin.

“We are confident that we will maintain the net interest margins at 4 percent this year...it is sustainable, even as the cost-put pressure sustains,” Ahuja said.

The current account savings account ratio remained flat at 24.4 percent in the first quarter, but it is likely to grow to 30 percent in a few years, said Ahuja. “CASA is critically important, but sometimes we tend to get carried away by the number...a 40 percent CASA ratio does not mean lower cost of funds necessarily,” he added.

On the asset quality front, the gross bad loan ratio remained stable at 1.4 percent in the first quarter. The bank said in a press conference following the earnings’ announcement that they don’t have any accounts that might go to NCLT and that the central bank’s Feb. 12 circular does not have any bearing on its functioning. Overall, the bank expects to keep stressed assets contained within 1.5 percent of the book.

Other Highlights

  • Net non-performing assets ratio stood at 0.75 percent against 0.78 percent in the previous quarter.
  • The bank’s provisions for bad loans also increased 24.3 percent sequentially to Rs 140.4 crore.
  • Cost to income ratio at 50.8 percent versus 52.8 percent in the last quarter.

Shares of the private lender snapped a two-day rally and fell as much as 3 percent to Rs 548 apiece following the results announcement.

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