RBL Bank reported a 170 per cent annual increase in profit for the quarter ended September, alongside higher net interest income and lending. Foreign currency deposits contributed to balance-sheet growth, while management also disclosed growth excluding that funding component. The unaudited standalone results show a lower non-performing loan ratio but higher credit costs.
Economics & Markets··Morning
Net interest income lifts quarterly earnings
RBL Bank, the Indian lender, reported net profit of 4.82 billion rupees for the quarter ended September, up 170 per cent from a year earlier. Its board approved the unaudited standalone results on October 12. Net interest income rose 37 per cent annually to 21.31 billion rupees, and the net interest margin reached 4.61 per cent.[1], [2]
Profit increased 90 per cent from the preceding quarter. The net interest margin was 4.13 per cent in that quarter and 4.51 per cent a year earlier. Total income grew 29 per cent annually to 32.08 billion rupees, while operating expenses increased 3 per cent to 18.12 billion rupees. Operating profit reached 13.96 billion rupees, up 92 per cent.[1]
Foreign currency funding expands the balance sheet
Advances increased 42 per cent annually and deposits 34 per cent. Foreign currency deposit mobilisation contributed to that growth. RBL raised funds through the Reserve Bank of India’s foreign-currency deposit swap facility, then deployed part of the resulting funding into loans. The bank separately measured loan growth after excluding this component of its funding.[1], [2]
Chief executive R Subramaniakumar put underlying loan growth at around 30 per cent when that component was excluded. Deposit growth without the foreign currency component was 6 per cent. Retail term deposits grew 16 per cent during the quarter, compared with 22 per cent in the previous quarter. Management plans to align deposit raising with lending requirements.[2]
Non-performing loan ratios fall as credit costs rise
The gross non-performing loan ratio fell to 1.02 per cent from 2.32 per cent a year earlier. The net ratio was 0.29 per cent. Credit costs in rupee terms rose 53 per cent annually to 7.71 billion rupees. Provision coverage, including written-off loans, reached 95.31 per cent.[1]
Retail and wholesale loans accounted for 56 per cent and 44 per cent of the portfolio respectively. The common equity tier-one ratio stood at 29 per cent. The capital adequacy ratio stood at 30.1 per cent, compared with 33.3 per cent at the end of June. Management intends to deploy funding to highly rated corporate borrowers, wholesale opportunities and secured retail lending.[1], [2]
