RBL Bank Q3 Results Review - Adjusted PAT Inline; AIF-Related Provisions Dent Earnings: Motilal Oswal

Motilal Oswal Report

RBL Bank Ltd. reported Q3 FY24 profit after tax of Rs 2.33 billion (26% miss) as the bank made a contingent provision of Rs 1.15 billion with respect to AIF investments pursuant to the RBI circular.

Adjusted for this provision, PAT stood at Rs 3.19 billion (versus our estimate of Rs 3.16 billion).

Net interest income grew 21% YoY to Rs 15.4 billion (inline; up 4.8% QoQ). Net interest margins moderated by 2 bp QoQ to 5.52% in Q3 FY24. 

Advances growth was healthy at 20% YoY/4.7% QoQ, led by healthy growth in the retail segment. Deposit growth stood at 13.5% YoY/3.3% QoQ. The current account and savings account ratio moderated 195 bp QoQ to 33.8%.

Fresh slippages increased to Rs 6.7 billion. Gross non-perforiming asset/net non-performing asset ratios were largely flat at 3.12%/0.80%, while provision coverage ratio declined 56 bp QoQ to 75.1%.

We cut our FY24/FY25 earnings estimates by 10%/9% and estimate FY25 return on asset/return on equity of 1.1%/10.3%.

We reiterate our 'Neutral' stance with a revised target price of Rs 270 (1.0 times Sep-25E adjusted book value).

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