Mid-sized private sector lender RBL Bank Tuesday reported a 36 per cent growth in the September quarter net at Rs 2045.4 million, driven by a healthy rise in interest income as its loan book swelled 37 per cent on robust demand and higher margins.
Even in trying times like the present one, where interest rates have been going up, which pushes up cost of funds for lenders, along with bond prices, the bank managed to improve its net interest margin to 4.08 per cent from 3.74 per cent boosting its core net interest income.
The net interest income, which is the difference between what a lender earns from lending by borrowing money from elsewhere and the key metric to gauge the profitability, rose a healthy 41 per cent to Rs 5929.7 million, while the non-interest income was up 38 per cent Rs 3331.1 million.
The core fee income increased by 60 per cent to Rs 3252.4 million.
Describing the numbers as "fantastic given the times we are in", chief executive Vishwavir Ahuja credited them to the prudent lending and risk assessment practices that the bank follow.
"We continue to consistently maintain our growth momentum and importantly have delivered higher margins and strong profitability with robust asset quality despite challenges in the operating environment. We continue to track well to our Vision 2020 goals," said Ahuja.
When asked about whether the bank is cautious in lending to the troubled NBFCs/HFCs, he said, "We've always been cautious in our lending, but the ongoing crisis has not made us more cautious."
"We've an exposure of Rs 26.23 billion to the NBFC/HFC sector and over 780 per cent of them are rated 'A' or above. Moreover, we lend to them only against their cash-flows. So we have not stopped lending to them nor have any plans to do so," Ahuja told reporters announcing the numbers.
When asked about his exposure to the crippled IL&FS group, he said, "It's effectively zero as we have a low double-digit exposure to the group, which is more than fully secured with a fixed deposit."
He, however, did not quantify the same.
On the assets quality front, the bank reported a marginal decline in the gross non-performing assets (NPAs) at 1.40 per cent, from 1.44 per cent in the year-ago period. Even net NPA rose to 0.74 per cent, from 0.78 per cent a year ago.
The bank's growth in advances portfolio rose by a 37 per cent on year-on-year basis, Ahuja said.
He said the bank's cost-to-income ratio improved to 51.51 per cent, from 54.15 per cent and guided towards it closing the year under 52 per cent.
Similarly, he also said the bank will maintain margins above 4 per cent for the year.
"Net advances grew to Rs 458.7266 billion, against Rs 335.7601 billion, with all-round growth observed in all business segments," the bank said, adding deposits rose 31 per cent to Rs 477.9009 billion.
The capital adequacy ratio stood at 13.12 per cent and tier-1 capital adequacy ratio was at 11.84 per cent, significantly higher than the regulatory requirements, it said.
The RBL counter closed with a marginal 1 per cent drop at Rs 464.90 on the BSE, whose benchmark Sensex continued to bleed with a loss of 287 points or 0.84 per cent.