RBL Bank net income plunges 86% in Q3 amid higher provisions for bad loans

The bottom line was hit badly as it made an additional provision of Rs 414 crore on gross NPAs of the joint liability group portfolio
RBL Bank (Photo| Special arrangement)
RBL Bank (Photo| Special arrangement)
Updated on
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MUMBAI: Higher provisions for bad loans on a prudential basis pulled down the earnings of the mid-tier private sector lender RBL Bank, with its net income plunging by a massive 86% on-year to Rs 32.6 crore in the December quarter. Sequentially, earnings were 85% less than the previous quarter.

The bottom line was hit badly as it made an additional provision of Rs 414 crore on gross NPAs of the joint liability group portfolio, taking total NPA provision on this portfolio to 85 percent despite an improvement in overall asset quality.

Its gross non-performing assets (NPAs) improved to 2.92% in the reporting period from 3.12% a year ago but inched up marginally from 2.88% in the September quarter. Similarly, net NPAs also improved to 0.53% from 0.80% on-year and from 0.79% sequentially, the bank management told reporters in a con-call Saturday.

In absolute terms, gross NPAs of the bank stood at Rs 2,701 crore compared to Rs 2,581.08 crore in the September quarter and Rs 2,551.05 crore in December 2023, while net NPAs stood at Rs 481.64 crore for the quarter compared to Rs 635.64 crore a year ago and Rs 697.51 crore in the September quarter.

Expecting a spike in bad loans from the microfinance book, the bank chose to make an additional provision, on a prudential basis, of Rs 414 crore on gross NPAs of the joint liability group portfolio, taking total NPA provision on this portfolio to 85%. This had the bank’s overall provision coverage ratio including technical write-offs at 93.46%.

Credit cost, including above additional provision on GNPAs in the JLG loans, was 139 bps for the period.

The total provisions of the bank including specific, general and contingent provisions are at 110% of GNPA.

Net interest income grew 3% on-year to Rs 1,585 crore, while net interest margin stood at 4.90% and other income rose 38% to Rs 1,073 crore; core fee income for the quarter rose 19% to Rs 871 crore.

Deposits grew 15% to Rs 1.07 trillion, of which the low cost Casa grew 12% to Rs 35,022 crore which is 32.8% of overall deposits.

Advances grew 13% to Rs 90,412 crore, of which retail loans grew 19%, housing loans grew 33%, vehicle finance grew 30% and commercial banking grew 21%.

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