RBL Bank climbs after dismissing rumours about its financial health

RBL Bank rose 3.56% to Rs 168.70 after the bank reiterated that it is financially strong, well-capitalized, profitable, and a growing entity with a strong governance set-up.

RBL Bank clarified during trading hours on Tuesday (17 March) that market rumours around financial health and stability of the bank are totally misplaced, motivated and not based on facts.

It added that the bank is well capitalized with a capital adequacy ratio of 16.08% with Tier-1 at 15.02% (significantly higher than the prescribed regulatory requirement at 11.5% and 9.5%, respectively). There has been no material adverse change in the asset quality since we announced our Q3 financial results on Jan 22, 2020 and our guidance remains consistent. (This is after taking into consideration our exposures to the south based client).

While there has been no material impact on our retail deposits, there have been some withdrawals from institutional depositors and a couple of state government organizations constituting about 3% of our total deposits in the last one week. However this issue is being addressed by us on a one-on-one basis with the state governments and also at the industry levels by RBI. In spite of this, we remain highly liquid with significant retail deposits, institutional lines, refinance, and surplus liquid assets.

The bank added that all its business segments are doing well, it continues to expand presence across newer geographies by adding branches and it is also hiring more people than previously planned. The management team of the bank is fully committed to develop and grow the institution to the next level over the next several years.

RBL Bank is committed to all its stakeholders and we would urge all our stakeholders to not believe unsubstantiated information and mischievous rumours, it concluded.

Shares of RBL Bank tumbled 45.97% in six sessions to Rs 162.90 on Monday (16 March 2020) from its recent closing high of Rs 301.50 on 5 March 2020.

The private lender's net profit slumped 68.9% to Rs 69.95 crore despite a 31.4% surge in total income to Rs 2,644.30 crore in Q3 December 2019 over Q3 December 2018.

RBL Bank is engaged in providing a range of banking and financial services, including commercial banking, retail banking, agriculture finance and financial inclusion, treasury operations and other banking related activities.

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