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Motilal Oswal Report
RBL Bank Ltd. reported a decent Q3 FY22, amid heightened concerns after the management change last month, with net earnings of Rs 1.56 billion (a 10 quarter high) and supported by a 35% QoQ decline in provisions.
Business trends were mixed, with the loan book growing by 4% QoQ, while the deposit portfolio declined sequentially. Margin improved by 28 basis points QoQ to 4.34%, led by a decline in funding cost, while the cost/income ratio rose sharply to 61.3% on higher business expenses.
Fresh slippages fell 37% QoQ to Rs 7.66 billion – largely from the retail portfolio (credit cards/micro finance institution). Gross/net non performing asset ratio improved by 56 bps/29 bps QoQ to 4.84%/1.85%.
We raise our FY23E/FY24E earnings estimate by 9%/5% and expect RBL Bank to deliver a FY24E return on asset/return on equity of 1.2%/~11%.
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