RBL Bank Q2 results: Net profit falls 24% to Rs 223 cr on rising expenses

Private lender RBL Bank’s net profit fell by 24 per cent year-on-year (Y-o-Y) to Rs 223 crore in the quarter ended September 2024 (Q2FY25), owing to higher growth in expenses.

The net interest income (NII) of the bank rose by 9 per cent in the reporting quarter to Rs 1,615 crore from Rs 1,475 crore.

Net interest margin (NIM) slipped to 5.04 per cent for Q2 FY25 from 5.54 per cent a year ago and from 5.67 per cent in June 2024.

The cost of funds (CoF) rose to 5.59 per cent, as against 4.92 per cent in the year-ago period.

The advances of the bank rose 15.14 per cent in the quarter under review to Rs 87,882 crore from Rs 76,324 crore in the year-ago period. Deposits increased by 20 per cent Y-o-Y to Rs 1.08 trillion.

Sequentially, provisions rose to Rs 618 crore due to higher slippages in credit cards and microfinance.

The gross non-performing asset (NPA) ratio was 2.88 per cent as on September 30, 2024, compared to 2.69 per cent as on June 30, 2024.

The net NPA ratio stood at 0.79 per cent as on September 30, 2024, compared to 0.74 per cent as on June 30, 2024.

In its post-earnings call, R Subramaniakumar, chief executive and managing director, RBL Bank, said, "The stress in the microfinance book is due to industry-wide issues, but the same on the credit card front, where the regulator has been flagging risks for the industry, is on account of internal aspects."

During the call, a senior banking official said the lender expects the challenges in credit cards, which are arising out of a transition to taking loan collections in-house from being outsourced to a partner earlier, to settle by the end of the third quarter. However, the same issues in microlending may persist longer.