RBL Bank Q3 net doubles to Rs 147 cr on other income, low operating costs

Affordable housing and tractor loans are the new business segments that the bank is entering

Private sector lender RBL Bank has doubled its net profit in the October–December quarter (Q3) of FY21 to Rs 147 crore, from Rs 70 crore in the year-ago period in FY20, driven by other income and low operating costs. The bank earned its highest ever operating profit at Rs 805 crore in the reporting quarter, up 12 per cent from a year ago.

Its net interest income (NII) was down 2 per cent year-on-year in the reporting quarter to Rs 908 crore, from Rs 923 crore in the year ago period due to interest reversals, but other income was up 19 per cent to Rs 580 crore as core fee income improved to surpass pre-covid levels. The bank had a net interest margin (NIM) of 4.19 per cent in the same period.

“Over the next few months, NIMs and other income trajectories should start to reflect pre-covid run rates,” the bank management said.

 

“We continue to see uptick in certain segments. The wholesale book demonstrated good stability and continued to show improvement and has given us confidence to grow it in a prudent manner. The credit card portfolio has also behaved according to expectations. New business traction in the credit card segment is at pre-covid level. However, the challenges and credit cost associated with the retail business loans in the MSME segment and micro banking segment has been somewhat higher”, Vishwavir Ahuja, MD & CEO, RBL Bank said.

“Retail business loans to the MSME segment was impacted the most due to the pandemic. We have taken all measures to cushion its impact and new business has been deliberately slowed down till the economy picks up”, he added.

The bank’s provision for bad loans and standard assets totaled to Rs 610 crore in Q3FY21 compared to Rs 623 crore in the year ago period. In the preceding quarter, the bank made provisions to the tune of Rs 526 crore. Asset quality of the lender improved due to Supreme Court’s standstill order on asset classification. The reported gross NPAs of the bank in Q3FY21 stood at 1.84 per cent compared to 3.33 per cent in Q3FY20 and 3.34 per cent in Q2FY21. The reported net NPAs stood at 0.71 per cent.

Had the bank classified accounts which were 90 days past overdue, if not for the apex court’s order on asset classification, the bank’s gross NPAs would have been 4.57 per cent and net NPAs would have been 2.52 per cent. “As a matter of prudence, the bank has made additional provision in respect of these accounts”, it said.

 

While the reported slippages for the quarter was nil, the proforma slippages totaled to Rs 1,470 crore, on which NPA level provisioning has been taken. Bulk of these slippages, approximately Rs 1,300 crore were on account of the retail businesses. Total restructuring book of the bank is approximately Rs 550 crore, primarily from the retail business. The final restructuring book of the bank as a whole is expected to be around 1.5 per cent of the advances by the end of the financial year.

"The experience of stress in some retail businesses is episodic and largely covid related and the fundamentals of those businesses, whether its card or micro-banking still remains very strong. But they are high opportunity businesses", Ahuja said. 

Retail advances grew 16 per cent yoy and 2 per cent sequentially but wholesale advances were nearly flat compared to last quarter. Overall, advances of the bank degrew year on year to Rs 56,444 crore. On the other hand, deposit book of the bank grew 7 per cent yoy to Rs 67,184 crore while CASA has grown 24 per cent to Rs 20,867 crore.

Affordable housing loans and tractor loans are the newer business the bank is entering. It is building a loan book of Rs 500 crore in the affordable housing business by the end of this fiscal. But they are yet to start tractor loans business.

Shares of the bank closed at Rs 215 apiece, down 1.62 per cent from previous days close on the BSE.