RBL Bank | Representative image
Small-sized private lender RBL Bank on Tuesday reported a 34 per cent decline in its March quarter profit to Rs 75 crore compared to Rs 114 crore in the year-ago period due to provisioning for possible loan losses that it sees in the retail unsecured segments. The city-based lender's net profit for FY2020-21 increased marginally to Rs 508 crore from the year-ago's Rs 506 crore.
Total income during the January-March quarter fell to Rs 2,611 crore from Rs 2,709 crore in the year-ago period, the bank said in a regulatory filing. The bank's core net interest income was down 11 per cent during the reporting quarter at Rs 906 crore, impacted largely by the narrowing of net interest margin to 4.17 per cent and also a 1 per cent growth in advances in FY21 as it moved away from corporate loans.
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Its managing director and chief executive Vishwavir Ahuja explained that there was a 0.50 per cent impact on the NIM because of an interest reversal of Rs 85 crore on account of the Supreme Court order on standstill accounts. He exuded confidence that the NIM trajectory will return to the normal trajectory and the crucial number will be over 4.75 per cent in FY22.
The bank's overall provisions shot up to Rs 766 crore as against Rs 601 crore in the year-ago period, on account of an additional Rs 70 crore set aside as accelerated provisions for stressed unsecured advances. Ahuja explained that the bank has set aside 100 per cent of the overdue on credit card loans overdue for over 180 days and 50 per cent for the micro lending book as a prudential measure which resulted in the uptick in the provisioning.
He, however, said that both the businesses are profitable in their individual right and earmarked as key growth businesses going ahead as well. The gross non-performing assets (GNPA) ratio stood at 4.34 per cent as of March 31, as against the 4.57 per cent level including proforma NPAs in the quarter-ago period.
The fresh slippages during the quarter came at Rs 1,439 crore, and 80 per cent of them were from retail advances, with a bulk 80 per cent of them from the unsecured side. Ahuja said stress in the wholesale book which de-grew by over 10 per cent in FY21 has stabilised and the bank plans to grow the book by high single digits in FY22.
The bank will continue to chase growth on the unsecured retail advances like credit cards which it has been doing for long, and restrict itself to the secured side like home loans and tractor loans in the newly launched business, Ahuja said. The provision coverage ratio has moved up to 72 per cent as of March 2021, a 8 percentage point jump over the fiscal, and the bank aims to take the number to 80 per cent by FY22 end, Ahuja said.
The overall COVID-related restructuring will be 1.2 per cent of the overall book, and about 0.45 per cent of it is under implementation, which will be completed in the June quarter. Total income during the year was down at Rs 10,272 crore from Rs 10,425 crore.
Bank's total deposits grew by 26 per cent year on year to Rs 73,121 crore. Of this, the retail deposits grew 43 per cent to Rs 27,236 crore, the lender said. RBL shares gained 0.36 per cent to close at Rs 181.75 on the BSE.