RBL Bank gains 4% post June quarter results; Citi maintains neutral rating

RBL Bank | BNP Paribas Arbitrage sold 36,84,210 shares at Rs 125.86 in a bulk deal on NSE. (Image: PTI)

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Shares of RBL Bank gained around 4 percent on Friday as investors bet on the stock post its Q1 results.

The stock touched an intraday high of Rs 576.00 and an intraday low of Rs 557.05.

The private sector lender started the year on a strong note as profit grew by 34.8 percent in June quarter with stable asset quality but provisions increased sharply.

Net profit during the quarter stood at Rs 190.04 crore, increased from Rs 141.02 crore in corresponding period last fiscal. The growth was backed by net interest income, other income and operating income.

Net interest income, the difference between interest earned and interest expended, shot up 46 percent year-on-year to Rs 552.70 crore for the quarter ended June 2018, driven by loan growth and net interest margin.

The bank said net advances during the quarter grew by 36 percent year-on-year to Rs 42,198.09 crore. "The growth in the corporate & institutional segment and commercial banking (wholesale portfolio) was pegged at 31 percent, while that of other segments (retail assets and development banking & financial inclusion – non-wholesale portfolio) was 43 percent."

Deposits in Q1 surged 27 percent to Rs 44,949.59 crore YoY with current accounts & savings accounts (CASA) ratio improving to 24.42 percent as at June 2018 from 22.09 percent as at June 2017, it added.

Net interest margin expanded to 4.04 percent for the June quarter, up from 3.54 percent in same period last year and also from 3.8 percent as of FY18.

Brokerages have observed that asset quality has been stable for the bank during the quarter under review.

Brokerage: Citi | Rating: Neutral | Target: Rs 590

The global research firm observed that the asset quality was stable and the operational expenditure is likely to remain elevated. It also observed that the NPA coverage improved by 220 basis points QoQ to 47 percent.

Brokerage: Kotak | Rating: Sell | Target: Rs 475

The brokerage house said that the bank had a solid overall performance during the June quarter. It said that there were stable trends on asset quality, while business growth sees tailwinds.

The stock has gained over 6.5 percent in the past one month, while in the past three days it has gained a little over 3 percent. At 14:00 hrs RBL Bank was quoting at Rs 577.00, up Rs 21.10, or 3.80 percent, on the BSE. It touched an intraday high of Rs 577.25 and an intraday low of Rs 557.05.