RBL bank Q3 net profit dips 69%

Private sector lender RBL Bank Ltd on Wednesday reported a 69% on a year-on-year (y-o-y) decline in its net profit to 70 crore for the three months ended December, largely because of a surge in provisions.

The bank’s total provisions almost quadrupled y-o-y to ₹638 crore in Q3 FY20. Sequentially, provisions rose 20% from ₹533 crore in the September quarter of the current fiscal.

Net interest income – difference between interest earned and interest expended – stood at ₹923 crore, up 41% from the same period last year. The bank’s net interest margin, a key measure of profitability, was at 4.57% in Q3, up 45 basis points (bps) y-o-y.

Vishwavir Ahuja, chief executive, RBL Bank Ltd, in a statement, said, “challenges in a few corporate accounts and related provisioning requirements have impacted the bottomlime for the quarter".

The bank’s asset quality deteriorated in the December quarter, with gross bad loans as a percentage of total loans moving up 195 bps y-o-y to 3.33%. On an absolute basis, gross non-performing assets (NPAs) almost trebled y-o-y to ₹2,010 crore. The bank’s net NPA ratio was up 135 bps y-o-y.

“We are digesting this short-term pain and are looking to put this behind us over the next few months," said Ahuja.

In an interview to Mint on 17 January, Ahuja had said that despite not having exposure in some well-known cases of bad debt, the bank still faced trouble in three to four accounts. “We were not in Infrastructure Leasing & Financial Services (IL&FS), DHFL, Essar, Cox and Kings, CG Power, or Jet Airways and many others. However, we still got caught in 3-4 cases, which were all double AA companies," Ahuja had said.

Meanwhile, RBL Bank witnessed a net credit growth of 20% y-o-y to ₹59,635 crore. Its total deposits grew 21% y-o-y to ₹62,907 crore at the end of the December quarter and the current and saving accounts (CASA) ratio rose to 26.79%, up 222 bps.

As of 31 December, 2019, the bank’s capital adequacy under Basel III stood at 15.66%. In the quarter under review, RBL Bank raised equity capital of ₹2,701 crore.