RBL Bank falls 5% over asset quality issues; brokerages mixed

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26 Aug, 2025 12:21

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Shares of RBL Bank fell around 5 percent intraday on Wednesday as investors as investors reacted negatively to the bank’s December quarter show.

The bank reported a 28 percent growth in net income for the three months period to December at Rs 165.33 crore, despite an increase in bad loans and provisions which was offset by higher margins.

Higher advances which grew 38 percent pushed up its net interest margins by 51 bps to 3.89 percent during the reporting quarter which helped it offset the impact of higher provisions and bad loans.

The core net interest income rose 45 percent to Rs 467.29 crore during the quarter under review, which boosted its overall other income by 42 percent to Rs 258.22, while the rising bond yields crimped trading income growth at 11 percent, he said.

The city-based bank said its bottomline would have been stronger than Rs 165.33 crore had it not been for a charge on investment in Utkarsh Micro Finance. Excluding this net profit would have been Rs 169.18 crore, a growth of 31 percent, Vishwavir Ahuja, managing director and chief executive at RBL Bank told PTI over a concall.

Brokerage: Morgan Stanley | Rating: Equal-weight | Target: Rs 500

The brokerage house said that core PPOP was in line and higher revenues was offset by higher operational expenditure. Meanwhile, long term growth potential thesis is intact, it said.

Brokerage: Kotak Instl Eq | Rating: Sell | Target: Raised to Rs 420

The brokerage house observed that NPLs moved up marginally, but are not worrisome at this stage. The valuations at current levels are rich, it said, adding that the bank is a bit more reliant on high yielding assets.

Brokerage: Citi | Rating: Neutral | Target: Rs 560

Citi said that the bank continues to grow at a rapid pace, making steady progress on op metrics. Further, it said that slight bump in asset quality is likely to reverse in the fourth quarter.

At 11:24 hrs RBL Bank was quoting at Rs 517.70, down Rs 18.80, or 3.50 percent, on the BSE. It touched an intraday high of Rs 538.80 and an intraday low of Rs 510.00.