RBL Bank Q1 Results: Net Profit Falls 48% As Provisions Rise
Private sector lender RBL Bank Ltd. saw its first quarter net profit fall 47.5%, as it made higher provisions to protect its balancesheet against the impact of the Covid-19 pandemic.
The bank reported a net profit of Rs 141 crore in the quarter ended June 30, as compared with Rs 267 crore a year ago. Net interest income, or the bank’s core income, rose 27.45% year-on-year to Rs 1,041 crore.
Provisions & Asset Quality
The bank set aside Rs 500 crore in provisions, as compared with Rs 197 crore in the same period a year ago. RBL Bank made additional provisions worth Rs 240 crore to cover for any potential losses from the pandemic, it said in a statement. The bank now holds cumulative provisions worth Rs 350 crore toward Covid-related losses, it said.
While provisions rose, asset quality indicators remained stable. Banks are currently permitted to offer a six-month moratorium to term loan customers. As such, the asset quality impact of the Covid-19 crisis is yet to reflect on bank balancesheets.
The bank’s gross non-performing asset ratio fell to 3.45%, as compared with 3.62% as on March 31. In absolute terms, gross NPAs fell 6.7% quarter-on-quarter to Rs 1,992 crore. The net NPA ratio fell to 1.65% for the three months ended June, compared to 2.05% in the previous quarter.
The drop in moratorium accounts was largely from the bank’s wholesale loan portfolio, said Vishwavir Ahuja, MD & CEO. On the non-wholesale front, about 30% of the portfolio is still under moratorium, he said.
Among credit card customers, 22% of the book by value and 11% of customers by number are currently under moratorium. Much of the additional provisions made by the bank against Covid-related losses have gone toward strengthening the credit card portfolio, Ahuja said. The bank’s credit card portfolio stands at Rs 10,289 crore.
Advances & Deposits
During the quarter, RBL Bank saw advances decline while deposits inched up.
Advances stood at Rs 56,683 crore, down 0.3% over a year ago. Deposits rose 1.5% compared to a year ago to Rs 61,736 crore.
The bank is expecting credit demand to come back only by the end of the current financial year, as the economy begins to come out of the lockdown, Ahuja said.