RBL Bank Q2 Results Review - Weak Quarter; Fresh Slippages Remain High: Motilal Oswal

Motilal Oswal Report

RBL Bank Ltd. reported Q2 FY25 profit after tax of Rs 2.2 billion (12% miss, down 24% YoY), dragged down by high provisions.

Net interest income grew 9.5% YoY to Rs 16.2 billion (3% miss) as net interest margins moderated 32 bp QoQ to 5.35%.

Advances grew at a modest 15.1% YoY/1.4% QoQ, while deposits increased by 6.5% QoQ (up 20.2% YoY). Current account and savings account mix improved to 33.6%.

Fresh slippages increased to Rs 10.3 billion, mainly due to the microfinance and credit card segments. Gross/net non-performing asset ratios rose 19 bp/5 bp QoQ to 2.88%/0.79%. Provision coverage ratio moderated 15 bp QoQ to 73%.

We cut our EPS estimates by 20%/4% for FY25/FY26 and estimate FY26 return on asset/return on equity at 1.0%/10.7%. Reiterate Neutral with a target price of Rs 220 (0.8 times FY26E adjusted book value).

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