RBL Bank reports strong Q2, provisions jump

Mumbai-based RBL Bank reported a 48% jump in operating profit on strong growth in both interest as well as non-interest income.

However, a near-doubling of provisions to Rs 140 cr (flat sequentially) prevented the full benefits from reflecting on the bottom line.

The company’s overall interest income in the second quarter rose by Rs 372 cr to 1,463 cr from Rs 1,091 cr a year ago, while expenditure on interest rose by only 199 cr to Rs 870 cr.

This boosted the company’s net interest income by Rs 172 cr, or 41%, to Rs 593 cr. Compared to the preceding quarter too, it was higher by 7%.

Other income, which is primarily fees and charges paid by customers, also rose sharply by Rs 92 cr, or 38%, on year to Rs 333 cr.

On the other hand, total operating expenses rose by only Rs 119 cr.

As a result, operating profit jumped by Rs 146 cr to Rs 449 cr during the second quarter.

However, net profit increased by only Rs 54 cr due to a sharp increase in provisions.

Non-tax provisions came in at Rs 140 cr versus Rs 75 cr last year — an increase of Rs 65 cr.

The bank saw a growth of 37% in advances. The net advances as at September 30, 2018 were Rs 45,872.66 crore as against Rs 33,576.01 on September 30, 2017.

The bank’s wholesale portfolio showed a 33% growth in advances, while the retail portfolio saw a 43% growth in advances.

The gross NPA (non-performing asset) ratio has decreased to 1.40% as at September 30, 2018 from 1.44% as at September 30, 2017. Restructured standard assets portfolio has decreased to 0.07% from 0.41% last year.

The net NPA ratio has decreased to 0.74% from 0.78%.

Provisioning coverage ratio — an indicator of how much of its bad loans have been provided for — increased to 61.45% from 58.27%.

It said deposits growth was driven by strong growth in current and savings deposits.

Deposits grew to Rs 47,790.09 crore as at September 30, 2018 as against Rs 36,569.05 crore.

CASA ratio — or current and savings account ratio — increased to 24.51% from 23.67% as at September 30, 2017.

Vishwavir Ahuja, MD & CEO, RBL Bank acknowledged “challenges in the operating environment.”

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