RBL Bank Q1 Results: Lower interest income drags profit, asset quality deteriorates

Private sector lender RBL Bank Ltd. reported results for the June quarter on Saturday, July 19, where a decline in core income, hurt the lender's profitability.

Net Interest Income for the quarter fell 13% from last year to ₹1,480.6 crore, which is lower than the CNBC-TV18 poll of ₹1,521 crore. The lender had reported a core income of ₹1,700 crore during the same quarter last year.

Net profit for the period nearly halved to ₹200 crore, a 46.2% drop from the base quarter's level of ₹372 crore. The figure though, was higher than the CNBC-TV18 poll of ₹159 crore.

Asset quality saw some deterioration from the March quarter, with gross NPA at 2.78% from 2.6% in March, while Net NPA stood at 0.45% from 0.29% in March.

Provisions during the quarter declined sharply on a sequential basis to ₹442.3 crore from ₹785.1 crore in March.

In its post-earnings concall, the bank acknowledged it faced asset quality challenges in the cards portfolio for most of last year but expects a gradual improvement. On the liabilities side, the bank said growth has been consistently strong. It also reiterated that it had earlier decided to calibrate growth in its unsecured book to stabilise the portfolio and that the bank remains on track with that approach.

RBL Bank noted that repo-linked loans were repriced immediately, while deposit repricing will take time. This, it said, has impacted net interest margins (NIMs) in the near term. However, the bank expects to see "reasonable improvement in NIMs from Q3 onwards." It also guided for a liquidity coverage ratio (LCR) in the range of 120–140.

Shares of RBL Bank ended 2.8% lower on Friday at ₹260.7. The stock has risen 17% in the last one month and is up 65% on a year-to-date basis, emerging as one of the best performing banking stocks this year.