RBL Bank Q4 Results: Net Profit Falls 34% To Rs 75 Crore
A sanitizer bottle sits on stool outside RBL Bank Nerul branch (Photo: BloombergQuint) 

RBL Bank Q4 Results: Net Profit Falls 34% To Rs 75 Crore

RBL Bank Ltd. reported a fall in its quarterly net profit as core income declined and provisions rose.

The private lender’s net profit for the quarter fell 34% to Rs 75 crore, from Rs 114 crore a year ago, according to an exchange filing. Analysts polled by Bloomberg had pegged the net profit at Rs 102 crore.

Net interest income, or core income, fell 11% from a year ago to Rs 906 crore. This compares with a forecast of Rs 936 crore. The bank’s other income, however, rose 38% year-on-year to Rs 688 crore.

The fall in net interest income was largely due to interest reversals and refunds that the bank had to make to borrowers after the Supreme Court order in the interest-on-interest case, according to Managing Director and Chief Executive Officer Vishwavir Ahuja.

The apex court had directed lenders to refund the compounded interest component charged to all borrowers between March and August 2020.

Asset Quality

  • Gross non-performing asset ratio for the bank improved marginally to 4.34% as on March 31 compared with 4.57% reported in December.

  • Net NPA ratio improved 40 basis points sequentially to 2.12%.

The asset quality numbers for the October-December period included accounts that were not classified as NPA due to a Supreme Court order banks from downgrading stressed accounts at the time.

During the quarter, the bank increased provisions against bad loans to Rs 766 crore compared with Rs 601 crore in the year-ago quarter and Rs 610 crore in the three months ended December. This took the bank’s provision coverage ratio up to 72.2% from 68.8% at the end of the third quarter.

The challenge in FY21 has come from retail assets of the bank, where almost all of the provisions made during the quarter were against retail loans, Ahuja said. An analyst presentation released by the lender showed that retail loans accounted for more than half of the gross NPAs as on March 31.

According to disclosures made by the bank in the filing, it has implemented the Reserve Bank of India’s one-time restructuring scheme for loans worth Rs 466.93 crore. All of the loans which were restructured under the RBI’s one-time scheme belonged to retail borrowers. RBL Bank currently holds provisions worth Rs 102.4 crore against these loans, it said.

Collections in March and April 2021 have remained stable so far, despite the fresh surge in Covid-19 infections. The bank will continue to closely monitor any impact on its asset quality in the months ahead, Ahuja said.

Advances & Deposits

Advances rose just 1% during the quarter to Rs 58,623 crore but the bank stepped up investments via its debt portfolio. Those rose 28% year-on-year to Rs 23,230 crore. Retail advances for the bank rose 13% year-on-year to Rs 34,390 crore. As of March 31, retail loans constituted 59% of the overall loan book.

Among retail assets, credit cards, with outstanding loans worth Rs 12,177 crore, were the largest segment rising 16% year-on-year. This was followed by business loans worth Rs 10,765 crore, which rose 3% year-on-year.

The bank, according to Ahuja, is looking to grow its secured retail loans as losses from the unsecured loan portfolio have risen. The bank will invest in growing its home, two-wheeler, gold and tractor loans businesses.

“After deliberate de-growth in corporate loan balance sheet, we are seeing growth and are confident that the risk profile of the corporate balance sheet is very high quality. There are segments which have held up well and we will grow in those segments,” Ahuja said.

Deposits of RBL Bank rose 26% to Rs 73,121 crore. The ratio of current account savings account deposits or CASA to total deposits stood at 31.8% compared with 31.1% a quarter ago.

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