Home >Industry >Banking >RBL Bank Q1 profit plunges 47% as provisions rise

Private sector lender RBL Bank Ltd on Tuesday reported a 47% decline in its June quarter net profit to 141 crore on the back of higher provisions and lower other income.

Its profits were lower than 174 crore estimated by a Bloomberg poll of 10 analysts.

The bank’s total provisions more than doubled on a year-on-year (y-o-y) basis to 500 crore in Q1 FY21. It set aside 240 crore in covid-19 provisions, taking its total cumulative provisions to 350 crore in the six months to June. RBL Bank’s other income was down 31% y-o-y to 334 crore.

“As we moved from a strict lockdown to various stages of unlocking, we saw a gradual improvement in economic activity. The bounce-back in the rural economy was quite strong," said Vishwavir Ahuja, managing director and chief executive, RBL Bank.

Like other lenders, RBL Bank’s loans under moratorium has declined as well. It said that 13.7% of its loan book was under moratorium as on 30 June, compared to 33% earlier. The fall in moratorium has been led by wholesale loans where 5% loans are under moratorium as compared to 22% earlier.

“In the wholesale book, we have seen a sharper reduction because of multiple reasons, including the fact that many customers who initially thought they needed it decided against availing or continuing with it as well as customers who were given conditional approval at that time, deciding against it," said Ahuja.

The bank’s net interest margin (NIM), a key measure of profitability, stood at 4.85% in the March quarter, down 8 basis points (bps) sequentially. Its net interest income (NII) or the difference between interest earned and expended grew 27% y-o-y to 1,041 crore in Q1 FY21.

“As a bank, we continue to remain focused on the balance sheet, capital conservation and maintaining surplus liquidity. As an important prudential measure, we have significantly increased both our provision coverage ratio (PCR) by more than 600 basis points to 70.5% and also taken significant additional covid-19 provisions," said Ahuja.

As a percentage of total loans, gross non-performing assets (NPAs) stood at 3.45%, as compared to 3.62% in the previous quarter. Its net NPAs were at 1.65% in the June quarter, compared to 2.05% in the previous quarter.

The bank’s deposits rose 2% y-o-y to 61,736 crore in Q1 FY21. Its current and savings account (Casa) deposits grew 18% y-o-y and 8% sequentially to 18,566 crore in the June quarter. The share of retail term deposits and Casa in the total deposits was 60% as of 30 June.

RBL Bank’s net advances increased 0.27% to 56,683 crore as on 30 June but was down 2% sequentially. Its non-wholesale advances grew 24% y-o-y to 29,941 crore and accounted for 53% of the net advances of the bank.

Its capital adequacy ratio as per Basel III was at 16.14% as against 12.07% in the same period last year.

Shares of RBL Bank closed at 181.85 on the BSE on Tuesday, up 1.71% from its previous close, while India’s benchmark Sensex index rose 1.47% to close at 38,492.95 points.

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