The bank's net interest income (NII) came in largely in line with expectations, led by a marginal expansion in net interest margin (NIM), which rose by 1 basis point sequentially to 4.51% compared with 4.50% in the previous quarter.
Pre-provision operating profit (PPOP) growth was aided by a moderation in operating expenses. However, higher provisioning during the quarter weighed on profitability, resulting in a 20% year-on-year decline in profit after tax (PAT).
What's more important that results
Emirates NBD Bank will invest up to ₹26,853 crore (approximately $3 billion) to acquire a 60% stake in the Mumbai-based private lender.
The investment will be made through a preferential equity issuance at ₹280 per share, with the RBL Bank board approving the issuance and allotment of 96 crore new equity shares.
This transaction represents several firsts and milestones for the Indian banking industry:
- Largest-ever foreign direct investment (FDI) in the Indian financial services sector.
- Largest-ever equity fundraise by an Indian bank.
- Biggest preferential issue by a listed company in India.
- First instance of a foreign bank acquiring a majority stake in a profitable Indian private sector bank.
In line with regulatory requirements, Emirates NBD will also make a mandatory open offer to acquire up to an additional 26% stake in RBL Bank at the same price of ₹280 per share.
Additionally, the Boards of both RBL Bank and Emirates NBD have approved the amalgamation of ENBD's India branches with and into RBL Bank, in accordance with Reserve Bank of India (RBI) guidelines.
Upon completion of the transaction, Emirates NBD will be designated as the promoter of RBL Bank and will have the right to nominate directors to the Board, subject to regulatory approvals.
The capital infusion is expected to -
- Triple RBL Bank's net worth from over ₹15,000 crore to about ₹42,000 crore.
- Accelerate branch expansion, digital initiatives, and customer engagement.
- Enhance the bank's credit rating, reduce cost of funds, and strengthen its balance sheet.
- Bring in Emirates NBD's global expertise, digital innovation, and strong governance practices to drive RBL Bank's next phase of growth.
An Extraordinary General Meeting (EGM) has been scheduled for November 12 to seek shareholders' approval for the proposed preferential issue.
Management commentary
In the post-results conference call, the management indicated that the partnership would enable RBL Bank to open Non-Resident Indian (NRI) accounts and expand its distribution network.
They also said that Emirates NBD operates at a return on equity (ROE) of around 19-20%, expressing optimism that RBL Bank could eventually achieve similar performance metrics.
Brokerages view
Global brokerage firm Citi has a 'Buy' rating on RBL Bank, and raised its price target to ₹390 per share. The brokerage said the acquisition of a controlling stake by Emirates NBD is a positive development not only for RBL Bank but also for the broader banking sector.
According to Citi, the risk of inefficient capital deployment remains low, given that the bank's franchise has stabilised over the past few years and it has already undertaken comprehensive recognition of stress in its microfinance and credit card portfolios.
The investment, Citi noted, significantly strengthens RBL Bank's medium- to long-term growth visibility, addressing earlier concerns around the cost of deposits, scale, and modest return on assets (RoA) through a substantial infusion of confidence and growth capital.
On quarterly performance, Citi said that aggressive write-offs in the microfinance and corporate loan segments pushed credit costs above 2%, which in turn drove the RoA below 0.5% for the quarter.
IIFL Finance has also maintained a 'Buy' rating on RBL Bank and raised its price target to ₹375 per share, citing multiple structural benefits from the recently announced Emirates NBD investment.
According to IIFL, the deal is expected to unlock several positives for the bank, including:
- A potential credit rating upgrade, which could help narrow the funding cost gap versus AAA-rated peers.
- Access to the Gulf Cooperation Council (GCC)–India remittance corridor, paving the way for growth in the Non-Resident Indian (NRI) deposit segment.
- Enhanced ability to underwrite large-ticket, high-quality corporate loans.
- Strengthening of transaction banking, treasury, and syndication franchises.
- Expansion into cross-border and wealth management services.
IIFL expects ROAs to expand by 35 basis points to an average of 1.5% over FY27-FY28. As leverage normalises, ROE is also expected to improve gradually.
Similarly, Motilal Oswal Financial Services has reiterated its 'Buy' rating on the stock with a price target of ₹350 per share.
The brokerage has raised its earnings estimates by 19% for FY27 and 17% for FY28, factoring in the expected fund infusion from Emirates NBD in Q1FY27.
Motilal now estimates RoA at 1.2% for FY27 and 1.4% for FY28.
Shares of RBL Bank Ltd. ended Friday's trading session with losses of 2.30% at ₹299.70. The stock has jumped 90% so far in 2025.
