RBL Bank Shares: Shares of Maharashtra-based RBL Bank fell as much as 14 per cent to hit an intraday low of Rs 176.50 after its net profit declined in the second quarter of the current financial year.
RBL Bank’s net profit in the September quarter declined 24 per cent to Rs 222.52 crore from Rs 294 crore during the same period last year. Its net interest income or the difference between interest earned on loans and interest spent on deposits amounted to Rs 1,615 million, up 9.5 percent from Rs 1,475 million during the same period last year.
The sharp drop in profits was due to asset quality challenges arising from credit card and microcredit portfolios.
RBL Bank CEO and CEO R Subramaniakumar told reporters that the stress on the microfinance book is due to issues affecting the entire industry, but the same on the credit card front, where the regulator has been pointing out risks for the industry. of internal aspects.
A senior bank official said the lender expects credit card challenges arising from a transition from previously outsourcing to a partner to loan collections in-house to be resolved by the end of the third quarter, but The same happens with microcredits. may persist longer.
New diversions almost doubled to Rs 1,026 crore during the quarter, with nearly 70 per cent of the additions coming from the credit card portfolio, while the rest came from microfinance, an official said.
The bank has hired new hands after it decided to move collection processes internally from July, which has resulted in high slippages, while in the case of MFIs, it is overleverage among borrowers that has caused higher setbacks.
Clarifying that the bank does not make multiple loans to a single borrower because its average size of exposure to a borrower is low, the official said he hopes the stress on this side resulting from industry-wide concerns will ease not before March quarter.
“MFIs will deteriorate further,” the bank official said.
The gross non-performing assets ratio fell 0.25 percent to 2.88 percent.
Despite a 15 per cent growth in advances, its net interest income rose only 9 per cent during the quarter to Rs 1,615 crore and the softer rise was mainly due to asset quality issues in the MFI and credit cards.
Net interest margin fell to 5.04 percent during the reporting quarter, down from 5.54 percent in the year-ago period, the bank official said, adding that it could take up to nine more months before that it will rise again to 5.4-5.5 percent. penny mark.
Other income grew 32 per cent to Rs 618 crore and proved to be a major factor in offsetting setbacks on the interest income front.
Overall provisions soared to Rs 618 crore as a result of elevated asset quality stress, and the bank’s management was on course for almost similar performance on the credit cost front in the third quarter.
On the deposit front, the bank recorded 20 per cent growth and made it clear that it aims to attract non-massive and granular liabilities.
The credit card portfolio will grow at the same level or slower than overall asset growth, the bank said, adding that it will now look at the quality front, where it will try to get more business from the same customer rather than focusing solely on portfolio growth. .
The bank’s overall capital adequacy stood at 15.92 percent as of September 2024, with core buffers at 14.19 percent. The bank will not consider a new infusion for at least a year, the bank added.
At 11:05 am, RBL Bank shares were trading 12.56 per cent lower at Rs 179.65, underperforming the Sensex, which was trading on a flat note.
(With PTI inputs)
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