No note-ban impact: RBL net jumps 59% as advances soar 46%

Mid-sized private sector lender RBL Bank today reported a steep 59 percent jump in its December quarter net at Rs 128.7 crore on the back of a healthy 46 percent growth in advances despite the note ban during most part of the quarter.

It can be noted that this credit growth for the bank comes even its larger private sector peers saw a steep 11 percent contraction in their loan growth, while the public sector peers saw much deeper contraction at 15 percent as per Crisil data, during the quarter following the note ban, which lasted almost two-thirds of the quarter.

"We have not been impacted by the note ban at all. In fact, we had the highest credit growth during this quarter," RBL managing director and chief executive Vishwavir Ahuja told PTI in an post-earnings concall.

He said RBL has so far in the year, saw strong growth at all levels in terms of assets and deposits growth as well as profitability despite challenging credit environment.

"The demonetisation should bring in positive structural changes in the economy which bodes well for the banking and financial services industry. In fact I see stronger growth opportunities ahead," Ahuja said.

Thanks to the note ban, it saw its Casa jumps to 23 percent from 19 percent pre-note-ban, which in absolute terms means Rs 1,500 crore of incremental Casa deposits, while the overall deposits net grew 44 percent to Rs 3,000 crore during the quarter. This helped RBL improve its cost-to-income ratio to 53.34 percent for the quarter, Ahuja said.

The core net interest income of the bank, which went public in Q2 and therefore the numbers for the period are not comparable, grew 45 percent to Rs 321.6 crore, pushed by other income which jumped 66 percent Rs 182.26 crore, taking the total income to Rs 503.84, up 52 percent for the period.

Ahuja said wholesale loan comprising 60 percent of assets, grew 50 percent while retail book, which forms the rest comprising microfiance, SME, agri loan against property clipped at 40 percent in the reporting period,fully insulated by the cash crunch in the system due to the note ban.

In absolute terms, advances grew to Rs 26,773.12 crore, up 46 percent year on year and 8 percent sequentially while deposits rose 44 percent to Rs 30,005.14 crore year on year and 7 percent quarter on quarter.

Ahuja had given an credit guidance of 35 percent for fiscal but in first nine months it is already at 44 percent.

The key profitability metrix net interest margin rose to 3.38 percent from 3.24 percent, while cost to income improved to 53.34 percent from 54.95 percent.

While large banks have been reporting a massive spike in bad loans, RBL's gross NPA improved a tad to 1.06 percent from 1.08 percent and net NPA improved to 0.52 percent down from 0.69 percent a year ago.