RBL Bank tanks 20%, hits life-time low as net profit dips 74% in Q2

Shares of RBL Bank tanked 20 per cent to Rs 231, its fresh life-time, low on the BSE on Wednesday after the private sector bank posted its worst quarterly show for the July-September quarter (Q2FY20) since listing on August 31, 2016. The stock fell below its previous low of Rs 242 touched on October 15. The stock was trading close to its issue price of Rs 225 per share.

At 10:10 am, RBL Bank was trading 17 per cent lower at Rs 238, as compared to a 0.36 per cent rise in the S&P BSE Sensex. A total of 9.05 million shares have changed hands on the counter on the BSE and NSE so far.

For the recently concluded quarter, the bank's standalone PAT plummeted 74 per cent year on year (YoY) at Rs 54 crore due to higher provisioning for bad loans.

Despite its net interest income (difference between income earned and expended) increasing by 47 per cent YoY to Rs 869 crore in Q2FY20, the profit before tax fell 67 per cent YoY. Provisioning cost, too, rose by 281 per cent or nearly three times YoY to Rs 533 crore from Rs 140 crore reported in the corresponding quarter of the previous fiscal.

That apart, asset quality of the bank worsened during the quarter with gross non-performing assets (NPA) ratio increasing from 1.4 per cent a year-ago to 2.6 per cent in Q2, and NNPA ratio jumping to 1.56 per cent versus 0.74 per cent last year. With this, the bank has already breached its full-year gross NPA guidance of 2 – 2.5 per cent provided after June quarter results.

"Given the difficult credit environment, the bank has faced challenges in a few corporate accounts. As matter of prudence, the bank has taken higher than required provisions on these accounts which have impacted bank’s bottom-line," the management said.