RBL Bank reported a healthy quarter, with in-line net intererst income partly offset by higher-than-expected provisioning, driving a marginal earnings miss. Net interest margins improved 48 basis points QoQ to 4.61%, with the full-quarter impact of capital infusion by Emirates NBD. However, NIM may moderate in the Q3 FY27 before improving in Q4 on the back of gradual deployment of surplus liquidity and rate hike. Credit growth was strong, with the bank expected to continue its 22-25% growth momentum, led by wholesale banking and moderate growth in unsecured book.
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Motilal Oswal Report
Following RBL Bank Ltd.'s September-quarter resullts, Motilal Oswal has reiterated its Buy rating on the stock with a target price of Rs 485. 1.6x Mar'28E adjusted book value per share.
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The brokerage highlighted, RBL Bank reported a healthy quarter, with in-line net intererst income partly offset by higher-than-expected provisioning, driving a marginal earnings miss.
Net interest margins improved 48 basis points QoQ to 4.61%, with the full-quarter impact of capital infusion by Emirates NBD. However, NIM may moderate in the Q3 FY27 before improving in Q4 on the back of gradual deployment of surplus liquidity and rate hike.
Credit growth was strong, with the bank expected to continue its 22-25% growth momentum, led by wholesale banking and moderate growth in unsecured book.
On asset quality, slippages are expected to moderate after H1 FY27, with a reduction in slippages in credit card book and higher secured asset mix, which shall gradually support a reduction in credit costs.
Motilal Oswal tweaks its FY27/28 earnings estimates, factoring in operating leverage, partially offset by softer fee income and estimates RoA to expand to ~1.5% by FY28E.
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Highlights from the management commentary
- NIM may soften marginally in the near term before improving in Q4 FY27 aided by lower funding costs, gradual deployment of surplus liquidity and rate hike impact.
- RBL plans to add 30-50 branches in Q3 FY27 and targets ~1,000 branches over the next 2.5-3 years.
- Bancassurance income is ~Rs 300 crore annually; RBL indicated that potential regulatory changes could lead to a 50-60% decline in bancassurance income.
- Overall slippages are expected to trend downward, with credit card slippages moving toward approximately Rs 400 crore in Q3-Q4 FY27.
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