Private lender RBL Bank shares tumbled four percent in the morning session as the lender along with NBFC Bajaj Finance decided to end their eight-year long partnership for co-branded credit cards.
“RBL Bank Ltd and Bajaj Finance Ltd have been in discussion over the last month, and it was felt that synergies through this co-brand partnership have undergone significant change over time,” the bank said in a release. The bank, however, added that the move won’t change the plans for its credit cards business.
The lender said the move to stop the partnership is in line with its vision to build a diverse range of collaborations with NBFCs such as Mahindra & Mahindra Finance Limited, TVS Finance Limited as well as consumer brands like IOC and IRCTC.
“The bank remains focused on growing its credit card business as a prominent customer acquisition engine.”
At 9.40 am, RBL Bank shares were trading at Rs 148.65 per share, down 4.05 percent on the NSE.
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International brokerage Investec maintained its hold call on the bank, but cut its target price to Rs 170 per share. The broking house remains cautious on RBL Bank as a result of its large exposure to the MFI and CC verticals.
The brokerage noted that Bajaj Finance was its largest sourcing partner. The move was likely prompted by increasingly stringent regulatory requirements for co-branding partners.
As a result of the move, the bank's headline credit growth could moderate 200 basis points to 13-14 percent in FY25, added Investec. There could be a corresponding decline in NIIs, leading to an estimates downgrade.
Growth is likely to revive in H2FY25, as the bank scales up arrangements with new co-branding partners.
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