RBL Bank's Q2 net surges over 6 times as provisions decline sharply

Aiming for 15% growth in advances in FY23, 20% in FY24, said RBL Bank MD, CEO

RBL Bank on Saturday reported a 554 per cent year-on-year surge in standalone net profit to Rs 201.55 crore in July-September quarter (Q2FY23) as a sharp decline in provisioning for bad loans from a year ago and healthy increase in net interest income boosted the private lender’s bottomline.

The massive year-on-year rise in net profit was also owing to a low base. On a sequential basis, the bank’s net profit was only marginally higher from Rs 201.16 crore a quarter ago.

According to the bank’s top management, provisions made for asset quality issues on account of the Covid crisis the same time last year were at Rs 651 crore. In the second quarter of the current year, the provisions fell to Rs 241 crore.

In Q2FY23, RBL Bank’s net interest income was at Rs 1,064 crore, up 16 per cent on year, while the net interest margin was at 4.55 per cent.

As on September 30, RBL Bank’s net advances grew 12 per cent on-year and 4 per cent sequentially to Rs 62,942 crore. Deposits grew 5 per cent year-on-year to Rs 79,404 crore. According to latest RBI data, overall growth in bank credit was 17.94 per cent on-year as on October 7, while deposit growth was at 9.6 per cent.

RBL Bank is aiming for a 15 per cent growth in advances in the current financial year, followed by 20 per cent in the next year, said R. Subramaniakumar, MD and CEO, in a post-earnings call.

The loan growth will be funded by granular growth in deposits, he said, adding that RBL Bank plans to launch two-wheeler, used car and gold loans in the current quarter. At present, the ratio of retail to wholesale loans of RBL Bank stands at 52:48, the lender said.

Elaborating on the strategy to fund aggressive loan growth, the top management said that at present, RBL Bank had Rs 7,500 crore worth of excess liquidity through Statutory Liquidity Ratio (SLR). The SLR is primarily comprised of holdings of government bonds.

As on September 30, RBL Bank’s current account savings account deposits – which are low-cost deposits – grew 7 per cent year-on-year to Rs 28,718 crore. The CASA ratio was at 36.2 per cent as against 35.4 per cent on September 30, 2021.

Within the deposit book, retail deposits registered growth of 4 per cent on-year to Rs 32,832 crore.

The bank’s gross NPA ratio improved; falling to 3.80 per cent as on September 30 from 4.08 per cent a quarter ago and 5.40 per cent a year ago. The net NPA ratio, however, showed a marginal rise on a sequential basis.

As on September 30, RBL Bank’s net NPA ratio was at 1.26 per cent versus 1.16 per cent a quarter ago and 2.14 per cent a year ago. Also, the bank's provision coverage ratio, including technical write-offs, was at 84.3 per cent versus 85.3 per cent on June 30.