RBL Bank Q4 Results Results - Improved Opex Offset By Higher Credit Costs: Dolat Capital

Dolat Capital Report

RBL Bank Ltd. reported a stable quarter with in-line net interest income growth at ~18% YoY, net interest margin at ~5.5% (-7 bps QoQ), healthy loan growth at 5% QoQ, and lower employee expenses offsetting the impact of higher provisions; aiding return on asset of 1.06%.

Slippage at 3.4% was elevated, led by MFI book. Improvement in gross non-performing asset ratio (-47 bps QoQ) was mostly driven by higher write-offs.

RBL Bank's management now guides for credit costs at upper end of the previously guided 1.5-2% range. Opex to grow at 10-15% YoY and will be a key lever for RoA expansion.

Driven by loan mix changes, NIM should expand in H2 FY25E, as cost of fund stabilizes.

We factor in improved operating efficiencies, offset by higher credit cost assumptions.

Maintain ‘Accumulate’ rating, valuing at one time FY26E price-to-book value with target price of Rs 285 against return on asset/return on equity of 1.1%/11% for FY26E.

We believe the banks RoA of 1-1.1% seems non-commensurate with risks given the high share of unsecured portfolio (one third book is MFI/CC).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.