RBL Bank's share price declined over 14 percent on October 21 after the company reported a 24 percent decline in net profit in the September quarter to Rs 223 crore on asset quality challenges emanating from credit card and microlending books.
The private sector lender had reported a post-tax net profit of Rs 294 crore in the year-ago period, and Rs 372 crore in the preceding June quarter.
On October 21, RBL Bank stock touched an intraday low of Rs 176.5 per share on the NSE, down 14.01 percent to hit its 52-week low. It opened with a loss of 5.97 percent in today's trading session.
The gross non-performing assets (NPA) ratio fell by 0.25 percent to 2.88 percent.
Despite a 15 percent growth in advances, the bank’s core net interest income increased by only 9 percent to Rs 1,615 crore during the quarter. This slower rise was mainly due to asset quality challenges in the microfinance and credit card segments.
The net interest margin narrowed to 5.04 percent in the reporting quarter, compared to 5.54 percent a year ago. A bank official mentioned that it may take up to nine more months for the margin to recover to the 5.4-5.5 percent range.
Other income surged 32 percent to Rs 618 crore, which helped offset the slower growth in interest income.
Provisions rose sharply to Rs 618 crore, driven by increased stress on asset quality. The bank’s management expects a similar trend in credit costs for the third quarter.
On the deposits front, the bank reported a 20 percent increase and stated that the focus is on attracting non-bulk and granular liabilities.
For the credit card segment, growth will either match or be slower than the overall asset growth. The bank said it will now focus on improving the quality of its portfolio by generating more business from existing customers rather than prioritizing portfolio expansion.
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