RBL Bank Q1 profit rises 27%, asset quality improves; CEO flags H1 credit card stress

RBL Bank reported a healthy set of June-quarter earnings, with higher net interest income, improved asset quality and lower operating costs supporting a 27% year-on-year rise in net profit, even as management flagged near-term stress in its credit card portfolio.

The lender's net interest income (NII) increased 12% year-on-year to ₹1,654 crore in the June quarter, compared with ₹1,481 crore a year earlier, while net profit rose 27% to ₹253.7 crore from ₹200 crore.

Asset quality improved sequentially, with the gross non-performing asset (GNPA) ratio declining to 1.30% from 1.45% in the March quarter, while the net NPA (NNPA) ratio eased to 0.37% from 0.39%.

In absolute terms, gross NPAs declined to ₹1,521.5 crore from ₹1,674.9 crore, while net NPAs fell to ₹426.1 crore from ₹442.7 crore.

Provisions stood at ₹599.2 crore, compared with ₹678.3 crore in the previous quarter and ₹442.3 crore in the corresponding quarter last year.

Other income declined 10% year-on-year to ₹959 crore, although core fee income rose 16% to ₹923 crore.

The bank also reported improved operating efficiency, with operating expenses declining 8% year-on-year and 5% sequentially to ₹1,691 crore. Consequently, the cost-to-income ratio improved to 64.7% from 72.4% a year earlier.

Business growth remained healthy. Net advances increased 23% year-on-year to ₹1,16,223 crore, with the retail-to-wholesale mix at 55:45. Within retail, secured advances rose 18%, while unsecured retail advances grew 8%, taking total retail advances to ₹64,196 crore. Wholesale advances surged 38%, led by 36% growth in the commercial banking business.

On the liabilities side, total deposits rose 11% year-on-year to ₹1,24,829 crore, while average deposits increased 24% to ₹1,29,362 crore. CASA deposits remained broadly unchanged at ₹36,468 crore, with the CASA ratio at 29.2%.

Commenting on the results, Managing Director and CEO R. Subramaniakumar said the successful completion of the capital raise from Emirates NBD would strengthen the bank's ability to invest, scale operations and build a more resilient franchise. He also highlighted the upgrade of RBL Bank's long-term credit rating to AAA.

During the post-earnings conference call, Subramaniakumar said the bank expects the first half of FY27 to witness some transitional stress in its credit card portfolio, though he characterised it as temporary. He added that the bank had not seen any stress arising from the West Asia conflict, but was closely monitoring the portfolio on a weekly basis.

The lender has also raised $150 million through FCNR deposits so far, while noting that it was not aware of any RBI target for banks to mobilise FCNR deposits.

Shares of RBL Bank ended 1.3% higher at ₹367.50 on the NSE on Friday, July 17.

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