InvestorQ : What are the key takeaways from the latest quarterly results of RBL Bank? Do you see risk in holding to the bank?
Dia Deshpande made post

What are the key takeaways from the latest quarterly results of RBL Bank? Do you see risk in holding to the bank?

Answer
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Ria Jain answered.
8 months ago


It may be recollected that the stock of RBL Bank had lost nearly 65% last year after it emerged that it had a major exposure to the Coffee Day group. From lower levels, the stock has recovered sharply but it is still more than 50% down from the annual peak levels. Its latest quarter results have been far from flattering. For the quarter ended December 2019, RBL Bank reported 69% fall in net profit to Rs.70 crore. This was largely on the back of surge in provisions.

In fact, the bank’s total provisions for the quarter virtually quadrupled to Rs.638 crore in the December quarter. The good news was the Net interest income (NII) grew by 41% on a YOY basis at Rs.923 crore. Even the bank’s net interest margin (NIM), a key measure of profitability, stood at a healthy 4.57%, which is at par with most of the profitably banks in India. The CEO has confirmed that the problems were largely restricted to a handful of corporate accounts which had to be provided for impacting the bottom line. This led to the gross NPAs moving up sharply from 1.38% to a worrisome level of 3.33%. Net NPAs were also up by 135 bps during the quarter.

However, there were some positives too for the bank. RBL Bank saw net credit growth of 20% to Rs.59,635 crore while total deposits grew 21% to Rs.62,907 crore. The share of CASA (current and savings accounts) ratio stood at 26.79%. RBL Bank had a comfortable capital adequacy ratio of 15.66%; well above the Basel statutory compliance.