RBL Bank’s shares fell over 9 per cent during the day on Tuesday before closing 7.55 per cent lower at ₹388.30 on the BSE, marking their steepest fall in nearly two years. Higher-than-expected provisions overshadowed a nearly threefold rise in net profit and an expansion in net interest margin (NIM) and net interest income (NII).
RBL Bank, a subsidiary of Emirates NBD, reported a 2.7-fold year-on-year (Y-o-Y) increase in net profit to ₹482 crore in the July-September quarter of FY27 (Q2FY27). The growth was supported by strong NII and robust loan growth. NII rose 37 per cent Y-o-Y and 29 per cent sequentially to ₹2,131 crore. The bank’s NIM, a measure of profitability, expanded 48 basis points sequentially to 4.61 per cent, compared with 4.51 per cent in the year-ago quarter.
Provisions rose 53 per cent Y-o-Y and 28 per cent sequentially to ₹766.5 crore during the quarter.
The bank’s management expects NIM to soften marginally in the near term before improving in Q4FY27, aided by lower funding costs and the gradual deployment of surplus liquidity. The benefit from the recent repo rate increase is also expected to support margins. The insurance regulator’s proposed measures could lead to a 50-60 per cent decline in the bank’s bancassurance income. The bank earns around ₹300 crore annually from the business. Overall slippages are expected to trend downward, with credit card slippages likely to moderate to around ₹400 crore in Q3 and Q4 of FY27.
RBL Bank reported a healthy quarter, with NII broadly in line with estimates. However, higher-than-expected provisioning partly offset the gains, resulting in a marginal earnings miss, Motilal Oswal said in a report on Tuesday.
Emkay said the bank’s net profit was 4 per cent below its estimate, largely due to provisions that were 32 per cent higher than expected. However, the bank continued to report accelerated, broad-based loan growth, supported partly by leverage from FCNR(B) deposits, while growth in its credit card portfolio remained muted.
The bank has surplus liquidity, which it plans to deploy in wholesale and secured retail lending. Margins are expected to moderate in Q3FY27 due to the full-quarter impact of FCNR(B)-led leverage and surplus funds parked in lower-yielding assets. The impact is expected to be partly offset by the benefit of the repo rate increase before margins recover gradually in Q4FY27, Emkay said.