RBL Bank Shares Face Pressure In Trade Despite Positive Citi Report — Here's Why

Shares of RBL Bank has faced pressure in trade today, falling well beyond 1.2% amid fears of expected credit loss (ECL) impact, as detailed in a recent Citi report.

The stock is currently trading at Rs 296, which is significantly lower than Tuesday's closing price of Rs 300. However, it must be noted that the stock has gone up 87% on a year-to-date basis.

Although a recent note from Citi has issued a 'buy' call on RBL Bank with a target price of Rs 390, the note cited the management saying that the shift to ECL norms would reduce RBL's net worth by 10-15%.

This is quite significant considering the fact that RBL management had anticipated an impact of 6-8% in the Q2FY26 concall.

This effectively means the shift to ECL norms will weigh on RBL Bank higher than anticipated. Citi, therefore, stated that under the new ECL norms, the blended standard asset provisioning is likely to increase by 30-40 basis points as opposed to current blended average of 35 bps.

Barring this, Citi remains overall constructive on RBL Bank, noting that the Emirates NBD acquisition is a net positive for the lender.

The capital boost received from ENBD will significantly boost RBL Bank's capital base from Rs 15,300 crore to Rs 42,000 crore, with a potential credit rating upgrade. This, in turn, could significantly reduce the bank's cost of funds, which has already started to moderate.

Citi also noted that microfinance slippages are moderating, which signals sequential book growth starting from the third quarter of financial year ending FY26.

Overall, despite near-term asset-quality and provisioning pressures, Citi believes the ENBD deal fundamentally resets RBL’s growth, capital strength, and funding profile, thereby supporting a target price of Rs 390 and ~30% upside from current levels.