RBL Bank shares in focus after Q3 net profit plummets 86% YoY to 33 cr
RBL Bank’s net profit plunged 86% year-on-year (YoY) to Rs 33 crore in the December quarter, down from Rs 233 crore in the same period last year, mainly due to issues in its microloan portfolio.
The private sector bank, which has faced challenging quarters because of higher credit costs, reported a net profit of Rs 231 crore in the September quarter.
The bank’s core net interest income increased by 3% YoY to Rs 1,585 crore, while other income rose by 38% to Rs 1,073 crore, boosted by the sale of its stake in NBFC DAM Capital.
CEO and Managing Director R. Subramaniakumar explained that the net interest margin (NIM) fell to 4.90% from 5.52% a year ago, with 0.40% of this decline attributed to microfinance exposures. The bank’s microfinance portfolio saw slippages surge to Rs 535 crore, compared to the usual Rs 125-150 crore, due to factors such as borrower over-leverage and a national campaign that decreased borrowers' repayment willingness. Additionally, a specific community in two districts of Karnataka showed reluctance to repay.
Despite these challenges, Subramaniakumar noted that collection efficiency improved to 97% in December, up one percentage point from the first two months of the quarter. He mentioned that it could take up to two more quarters for the microfinance segment to stabilize, but the share of microfinance loans in the overall portfolio may decline to around 6.5% from over 7% in December.
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