RBL Bank Q4 Results: Net Profit Drops 81% On High Provisions, Lower NII

Rise in provisions and slight fall in net interest income weighed on RBL Bank's net profit for the quarter ended March. The bottom-line slipped to nearly Rs 69 crore, down 81% year-on-year, according to an exchange filing on Friday.

Provisions and contingencies of the bank jumped 90% on-year to Rs 785.14 crore. This was largely because the bank had to make prudent additional provision on its gross non-performing assets of joint liability group portfolio taking total NPA provision on this portfolio to 100%.

The bank's management does not see the need to make extra provisions for its microfinance institution portfolio, going forward.

The net interest income came in at Rs 1,563 crore, down 2% compared to the year-ago period. Net interest margins improved slightly by one basis point sequentially to 4.89%.

"It is a flux year to be able to predict margins. Having said that we expect margins will come down before stabilising to roughly current levels in the next three to four quarters," the bank's management said in the earnings call.

However, the private lender's asset quality improved, with gross non-performing assets ratio falling to 2.6% at the end of March quarter as against 2.92% a quarter ago. Net NPA also fell to 0.29% compared with 0.53% in the December quarter.

The bank's gross slippage ratio fell to 1.15% in the March quarter from 1.50% as on December-end and 0.86% a year ago.

Of the gross slippages, the microfinance business contributed to Rs 439 crore as compared to Rs 521 crore a quarter ago, and the credit card business totalled to Rs 440 crore from Rs 533 crore a quarter ago, the management said during the earnings call. It expects slippages to normalise in unsecured segment by the September quarter.

Net advances of the bank grew 10% on-year to Rs 92,618 crore during the January-March period. The bank expects to grow its loan book in mid-to-high teens in the current financial year.

While retail advances grew by 13% on-year to Rs 55,703 crore, growth in secured retail book was 43% on-year. Managing Director R Subramaniakumar expects to focus more on secured lending and remains cautious on unsecured book, especially the microfinance institution book.

"We are moving towards secured segments...loan against property (LAP) and volatility on credit costs may come down as we move towards secured segments," Subramaniakumar said.

Credit cards grew 1% on-year to Rs 17,133 crore and personal loans fell by 17% on-year to Rs 3,245 crore, and JLG portfolio de-grew by 23% on year to Rs 5,752 crore, as per the bank.

Deposits rose 7% on year to Rs 1.10 lakh crore. Going forward, the bank expects to focus more on growing its granular retail deposits and not so much on bulk deposits.

Before the quarterly results were declared, shares of RBL Bank closed 5.3% lower at Rs 187.8 apiece on the BSE, compared to 0.74% decline in the benchmark Sensex.