RBL Bank Q1 net falls 47% to Rs 141 crore on higher provisions

As of June 30, 13.7% of the bank’s loan book by value was under moratorium, down from 33% earlier.

Private-sector lender RBL Bank on Tuesday reported a net profit of Rs 141 crore in the June quarter of FY21, down 47% year-on-year (y-o-y), owing to a 154% jump in provisions on a y-o-y basis to Rs 500 crore.

RBL Bank made Covid-related provisions of Rs 240 crore in Q1FY21 and provisions on this count stood at Rs 350 crore as at June 30, 2020.

Vishwavir Ahuja, MD & CEO, RBL Bank, said that the lender had taken an aggressive approach to provisioning. “As a bank, we continue to remain focused on the balance sheet, capital conservation and maintaining surplus liquidity. As an important prudential measure, we have significantly increased both our PCR (provision coverage ratio) by more than 6% to 70.5% and also taken significant additional Covid-related provisions,” he said.

As of June 30, 13.7% of the bank’s loan book by value was under moratorium, down from 33% earlier.

The wholesale book under moratorium dropped to 5% from 22%, while 30% of the non-wholesale remained under moratorium on June 30.

The ratio of the microfinance book under moratorium dropped to 35% from 100% and that in the credit-card segment declined to 22% from 24%.

“In the wholesale book, we have seen a sharper reduction because of multiple reasons, including the fact that many customers who initially thought they needed it decided against availing or continuing with the morat as well as customers who were given conditional approval at that time deciding against it. In rural markets, we have seen some return to normalcy,” Ahuja said.

RBL Bank’s net interest income — the difference between interest earned and interest expended — rose 27.4% y-o-y to Rs 1,041 crore and its net interest margin (NIM), a key measure of profitability, fell eight basis points (bps) sequentially to 4.85%. The bank recognised slippages of Rs 5 crore during Q1FY21, compared to Rs 709 crore in Q4FY20 and Rs 225 crore in Q1FY20. RBL Bank saw an improvement on the asset quality front in Q1, with the GNPA ratio falling 17 bps sequentially to 3.45%. In absolute terms, the gross NPA stood at Rs 1,992 crore at the end of June 2020. The net NPA ratio fell 40 bps to 1.65%.

Net advances as on June 30 were at Rs 56,683 crore, unchanged on a y-o-y basis. Non-wholesale advances grew 24% y-o-y, while wholesale advances shrank 18% y-o-y, in line with the lender’s planned portfolio recalibration. Non-wholesale advances accounted for 53% of the net advances of RBL Bank. Total deposits grew 2% y-o-y to Rs 61,736 crore. Current account savings account (CASA) deposits grew 18% y-o-y and the CASA ratio as on June 30, 2020 stood at 30.1%, up from 25.8% as on June 30, 2019.

The capital adequacy ratio of RBL Bank as per Basel III, stood at 16.14% and the common equity tier-I (CET-I) ratio was at 15.16% at the end of June. RBL Bank’s shares on the BSE ended 1.71% higher than their previous close at Rs 181.85 on Tuesday. The results were released after the close of trade.