RBL Bank's Sept qtr net drops 79% YoY to Rs 31 cr on higher provisions

NII was down 2% to Rs 915 crore, but other income rose 42% to Rs 593 crore, taking the lender's total income to Rs 1,508 crore, up 12% YoY

Private sector lender RBL Bank has reported a 79 per cent year-on-year (YoY) drop in net profit in the quarter ended September (Q2FY22) due to higher provisions. Its net profit stood at Rs 31 crore, missing street estimates, compared to Rs 144 crore in the same period a year-ago.

The bank's net interest income was down 2 per cent YoY to Rs 915 crore in the reporting quarter but other income rose 42 per cent in the same period to Rs 593 crore, taking the lender's total income up 12 per cent to Rs 1,508 crore.

The bank reported a 33 per cent YoY rise in provision and contingencies to Rs 651.49 crore but sequentially it was down by 53 per cent.

Asset quality of the lender took a hit as gross non-performing assets (NPAs) climbed to 5.4 per cent at the end of Q2, up 41 basis points over Q1 and 206 bps over the same period a year-ago (Q2FY21). Net NPAs were up 13 bps sequentially and 76 bps YoY to 2.14 per cent. The lender restructured loans worth Rs 1,352.4 crore under the regulator’s covid restructuring scheme, of which loans worth Rs 645 crore were restructured under the second restructuring window. Also, restructured loans worth Rs 136 crore have slipped into NPAs.

Vishwavir Ahuja, MD&CEO, RBL Bank said, “This quarter was a peak in terms of GNPAs. But, going forward, we expect the slippages to be lower, recoveries to be higher, and therefore significantly lower NPAs in the second half of the year”.   

In Q2, the bank saw gross slippages to the tune of Rs 1,217 crore, down 10.3 per cent YoY. It also saw upgrades, recoveries, and write-offs to the tune of Rs 180 crore, 290 crore, and 527 crore, respectively.

“In wholesale banking, our activity levels have reversed from where we were over the last few quarters and we are starting to see an increase in traction for credit growth. In fact, in October, we saw Rs 1,000 crore of incremental disbursements and increase in our loan book. So, activity levels are back and credit growth seems to be looking up. We are confident that this trend will continue. In retail, we remain cautious on micro banking. On the credit card side, we see positive growth in October”, Ahuja said.

Advances of the lender remained flat on a YoY basis at Rs 56,009 crore. While the retail book de-grew by 4 per cent, wholesale book saw a 5 per cent increase to Rs 25,224 crore. Credit card segment saw an 11 per cent growth in the same period. The deposits book of the lender rose 17 per cent YoY to Rs 75,588 crore in the same period. The current account savings account deposits increased by 33 per cent to Rs 26,734 crore and the CASA ratio improved to 35.4 per cent of total deposits.