RBL Bank Ltd.'s profit for the quarter ended June met analysts' expectations on the back of strong growth in advances even as the lender predicts tougher times ahead.
The bank expects its asset quality to deteriorate in the next two to three quarters owing to corporate exposures, its Managing Director and Chief Executive Officer Vishwavir Ahuja said in a press conference. The lender, according to him, might also incur an additional 35 to 40 basis points credit cost on account of this stress.
“Given the difficult environment, we do expect to face some challenges on some of our exposures in the near term,” Ahuja said in the exchange filing.
“The portfolio is in a very good shape, but there are a few set of specific names where there is a certain level of stress that has emerged,” Ahuja told BloombergQuint in a post-earnings interview, adding these are not sector-specific and are driven by built-up leverage, tighter liquidity conditions and volatile markets.
The lender further projects its gross non-performing assets to increase to 2.25-2.5 percent over the next nine months, Ahuja said. He, however, doesn't foresee any impact of the same to its profit growth trajectory and also maintains credit growth in the 30 percent range.
RBL Bank's net profit rose 40.5 percent year-on-year to Rs 267 crore in the reported period, it said in a filing. Analysts tracked by Bloomberg were expecting a profit of Rs 262 crore. The private lender's bottom line was aided by a near 35 percent growth in advances.
Net interest income, or the bank's core income, grew 47.9 percent over last year to Rs 817.32 crore, higher than the Rs 782-crore estimate.
Key Highlights
- Gross non-performing assets remained unchanged at 1.38 percent.
- Net non-performing assets ratio was 0.65 percent against 0.69 percent in the previous quarter.
- Provisions for bad loans increased 7 percent sequentially to Rs 213.2 crore.
- Cost-to-income ratio at 52.35 percent versus 52.85 percent in the last quarter.
Shares of the private lender were down 13.8 percent after the earnings announcement, compared with a 2 percent decline in Nifty Bank Index.
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