RBL Bank Expects Lower Slippages In Q4, To Focus On Consolidation

RBL Bank Ltd. expects lower slippages sequentially in the quarter ended March despite the stress following a national lockdown and inability to make collections from its small business and retail customer segments.The private lender said in its quarterly update that it will focus on consolidating its balance sheet in the future. The novel coronavirus outbreak, it said, remains a concern and is an evolving situation.The bank, while stating that its asset quality in its legacy book is consistent with what it had guided for in the third quarter, said it may increase provision coverage ratio sequentially.A run-off in deposits, RBL Bank said, in the three-month period was under 8 percent over the previous quarter. It attributed the reduction to flight of bulk deposits from government entities and corporations. Liquidity coverage ratio for March stood at approximately 127 percent, it said, adding the marginal standing facility wasn’t utilised.The bank also said its net interest margin rose to a record, with its retail to wholesale advance mix ratio was around 55:45.Highlights Of RBL Bank’s Q4 UpdateBranch ExpansionTotal branch count rose by 62 to 386 in FY20.Fell short of the targeted 400 branches on the back of the national lockdown.Expansion plans for FY21 may continue as planned.Added marquee clients in corporate cash management and digital payments spaces.Digital SegmentCovid-19 has moved the needle on digital segment; significant jump in digital transactions and customer interactions.Road AheadContinuing consolidation in wholesale book.Fundamental demand and growth potential in retail and rural segments expected to return.Allocating capital to build new line of secured housing business; pilot successfully tested.Covid-19 concerns, safety of employees, employee sensitive schemes and incentives and customer service are focus in near term.Wholesale BookConducting detailed review of portfolio to assess potential impact.Concentration risk lower after recent de-bulking exercise.Exposure to sectors such as aviation, hospitality, transport/logistics, organised retail is low.On Non-wholesale bookMicro FinanceCollections for March were largely completed before the lockdown.Most micro lenders’ business correspondent branches closed barring a few outlets.Negligible Covid-19 impact seen in rural India.Loan officers continue to engage with customers to help them counter difficulties.EMI deferral moratorium being offered to all customers.Credit CardsAcquisition stopped after lockdown, only digitally sourced cards being booked.Volume to return to normal in a couple of months after lockdown.Spends down to 40 percent of run rate during lockdown period.Expect slight increase in credit costs in March and April as collection unable to function effectively.Tightening of risk filters to continue as in the last three quarters.Business LoansPortfolio is resilient as of now, with:a) More than 95 percent of portfolio with self-occupied collateral.b) Comfortable loan-to-value ratio around 65 percent.c) Negligible exposure to stressed sector like tours and travel, entertainment (less than 5%).Customers whose business cash flows are impacted by Covid-19 being given the option to opt for the moratorium of EMI deferral.

RBL Bank Expects Lower Slippages In Q4, To Focus On Consolidation

The novel coronavirus outbreak remains a concern and is an evolving situation, it said.

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RBL Bank Expects Lower Slippages In Q4, To Focus On Consolidation

The novel coronavirus outbreak remains a concern and is an evolving situation, it said.

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