RBL Bank Q3 results: Net profit doubles but retail, micro fin, MSME loans show stress
Net curiosity revenue (NII) or the distinction between curiosity earned on loans and that paid for deposits, fell 2% yr on yr because the financial institution needed to reverse earlier earned curiosity because of stress in its bank card, MSME and micro finance porfolio.
Net curiosity margin (NIM) dropped to 4.19% from 4.57% a yr earlier because of the reversal. Loan ebook dropped 5% yr on yr because the financial institution continued to shed wholesale loans whilst retail loans grew 16%.
A 19% progress in different revenue, led by charges from the financial institution’s bank cards enterprise, supported income. CEO Vishwavir Ahuja credit score prices will stay excessive for the final quarter of the fiscal as loans to people, small enterprises and micro finance report a 5% to six% NPA ratio.
“We have seen credit costs at 110 basis points and it will remain at similar levels in the last quarter as the full impact of the pandemic has not played out as yet…retail is showing some stress particularly in cards and micro banking but we still believe there is an opportunity to grow in these businesses once the impact of Covid is washed out,” Ahuja mentioned.
RBL Bank’s gross NPAs fell to 1.84% in comparison with 3.33% a yr in the past but together with loans which weren’t labeled as NPAs because of a Supreme Court keep, these NPAs ought to have been 4.57%.
Total restructured ebook stood at 0.91% of the financial institution’s mortgage ebook largely together with a Rs 475 crore bank card loans and about Rs 75 crore loans to MSMEs.
Total provisions remained elevated at Rs 610 crore in comparison with Rs 623 crore final yr holding income underneath verify.
Ahuja mentioned the financial institution will look to extend its secured retail loans enterprise within the subsequent fiscal because it appears to be like to mitigate its dangers from the excessive yielding bank card and micro finance enterprise.
“We have started a affordable home loan business a year ago which is now a Rs 500 crore book. We now plan to start a home loan and tractor loan business to leverage our network and tap the earnings potential while counter balancing our other risk profile ” Ahuja mentioned.
Micro finance loans which make for about 12% of the mortgage ebook are nonetheless limping again to normalcy as about 66% of the loans are displaying assortment effectivity of 92% decrease than the 99% norm for the sector.
“The new loans booked post June are at 99% efficiency and as good as pre Covid levels. It is the legacy loans which are under stress. But we are confident that this book will be back to normal once the Covid stress plays out,” Ahuja mentioned.
