Mumbai, Oct 19 – RBL Bank announced a 24% decline in net profit for the September quarter, falling to ₹223 crore, primarily due to challenges in asset quality linked to its credit card and microfinance portfolios.
The private sector lender's profit was ₹294 crore in the same period last year and ₹372 crore in the previous quarter. CEO R Subramaniakumar attributed the stress in the microfinance sector to industry-wide issues, while challenges in the credit card segment were linked to internal factors.
The bank reported nearly doubling of fresh slippages to ₹1,026 crore, with approximately 70% stemming from credit cards. A senior bank official indicated that the transition to in-house loan collections from outsourcing has contributed to this rise in slippages, particularly in microfinance, where over-leveraging among borrowers remains a concern.
The gross non-performing assets (NPAs) ratio decreased by 0.25% to 2.88%. Despite a 15% growth in advances, core net interest income increased by only 9% to ₹1,615 crore, largely due to asset quality issues.
Net interest margin narrowed to 5.04%, down from 5.54% a year earlier. Management expects it may take up to nine months to recover to the 5.4-5.5% range.
Other income rose by 32% to ₹618 crore, helping to offset declines in interest income. Provisions surged to ₹618 crore, reflecting the heightened asset quality stress.
The bank reported a 20% increase in deposits, focusing on attracting non-bulk and granular liabilities. The credit card portfolio is expected to grow at a rate equal to or slower than overall asset growth.
As of September 2024, RBL Bank's capital adequacy ratio stood at 15.92%, with core buffers at 14.19%. The bank does not plan any new capital infusion for at least a year.