ICICI Securities's research report on RBL Bank
RBL Bank (RBL) reported a weak set of results with a sharp ~40bps QoQ dip in NIM, double-digit NII de-growth and unchanged slippages. Reported PAT of INR 2bn (RoA of 0.5%) was supported by massive treasury gains (INR 2.7bn or ~0.7% of assets), INR 2.3bn utilisation of buffer and 500bps QoQ dip in PCR. We emphasise that ex treasury, PPoP declined nearly ~50% both YoY and QoQ. MFI slippages improved QoQ (along with SMA pool), though were offset by higher slippages in credit card and secured retail. We emphasise that NIM and RoA for RBL are much leveraged to the growth and asset quality of high-yielding credit card and MFI, where only gradual revival is likely. We increase our target multiple from ~0.7x to ~0.85x as NIM seems to have bottomed out and FY27E RoA could still be healthy at ~1%.
Outlook
Target price is revised to INR 250 (vs INR 210 earlier). Downgrade to HOLD (from Add). Upside risk: Higher-than-expected growth in credit card and MFI.
Downside risk: Higher-than-expected rise in slippages.
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