RBL Bank Q4 Review - Modest Return Profile In The Interim; Transitioning Underway: ICICI Securities
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ICICI Securities Report
RBL Bank Ltd.’s Q4 FY21 earnings reflect the anticipated asset quality stress:
Slippages of Rs 14.4 billion (cumulative run-rate of 5.4% in FY21) and restructuring of 1.4%.
Aggressive write-offs of Rs 6.7 billion and recoveries/upgrades of Rs 7.8 billion contained gross non-performing loans below Q3 FY21 proforma levels at 4.34%.
Credit cost elevated upward of 5% (accelerated provisioning on unsecured pool).
Nonetheless, sharp spike in fee income, stable net interest margins and contained cost supported operating profit growth.
Management’s focus is on reducing inherent business risk through granularity in the portfolio, scaling up secured lending segments, and fortifying the balance sheet through provisioning.
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