RBL Bank to ramp up retail exposure, from loans to deposits: CEO
- RBL will also focus on cross-selling across its portfolio, the CEO said.
RBL Bank aims to ramp up its retail exposure to protect its books from being over-exposed to large corporates and o help bolster growth alongside its key businesses of credit cards and microfinance said the private lender's top executive.
In order to improve its focus on the retail and mid-sized corporate segments, RBL has introduced new loan products, such as two- and four-wheeler loans, gold loans and education loans. It has also tweaked and has relaunched other products such as loans against property.
"All these products will be able to give a yield of 9%-14% and will allow risk to be diversified from corporate and microfinance book," Chief Executive R Subramaniakumar said in an interview to news agency Reuters.
Subramaniakumar took over as CEO in June, six months after the Reserve Bank of India appointed an additional director to RBL's board without giving a clear reason. In the past, the central bank has placed its officials on the board of banks to improve regulatory oversight in case of concerns.
RBL will also focus on cross-selling across its portfolio, the CEO said.
The bank is also working towards improving its return on assets (RoA) and return on equity (RoE). He expects an RoA of 1 per cent by the end of this year, rising to 1.5 per cent next financial year and reaching around 1.7 per cent by the end of FY25.
"Higher cost of funds versus large banks and past patchy record of the bank means that creating niche in low-yield secured segments and thus achieving sustainable higher than 1% RoA and higher than 10% RoE is going to remain a challenge," brokerage Ambit Capital said in a report last month.
But Subramaniakumar was steadfast when asked about the report.
"I stand by the estimate and may even surprise you," he said.
RBL's deposit growth was only 5 per cent in the July-September quarter, while its loan growth was 12.4 per cent. This while the industry's deposit growth was around 10 per cent and credit growth was 17.9 per cent as of Oct. 21, according to RBI data.
The bank is re-adjusting its strategy by moving away from bulk deposits to increase focus on low-cost savings and current account deposits, Subramaniakumar said.
"The idea is to increase the stability of the deposits and reduce volatility which comes from bulk deposit," he said.
RBL's stock has sunk 30 per cent in the last one year, in sharp contrast to the roughly 9% rise in the Nifty bank index.
Subramaniakumar ruled out any plans of a share buyback, saying the bank was well capitalised and even when the need arose, it would look at raising its tier-two capital.
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First Published:15 Nov 2022, 08:35 PM IST
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