RBL Bank Sees H2 Recovery After Profit Slumps On Higher Slippages

RBL Bank Ltd. expects growth and asset quality to improve in the second half of 2024-25, after slippages continued to weigh on performance in the June quarter, Chief Executive Officer R. Subramaniakumar said Saturday.

“We’ve been consciously growing our portfolio slowly and maintaining high origination thresholds for new credit cards, both for asset quality and customer value,” he said. “As a result, growth and asset quality should pick up in H2.”

Net profit dropped 46% on year to ₹2.00 billion in April-June as net slippages rose to ₹9.18 billion from ₹7.30 billion in the previous quarter. The net slippage ratio climbed to 0.99%, from 0.81% in January-March and 0.63% a year earlier.

Slippages were mainly from microfinance and credit card portfolios, contributing ₹3.2 billion during the quarter.

Net interest margin declined to 4.50% from 4.89% in January-March and 5.67% a year earlier. However, the bank expects to end the fiscal year with a margin close to 4.89%.

Explaining the fall in margins, Subramaniakumar said repo-linked loans reprice quickly with rate cuts, while deposit cost reductions take longer. “We may see a small margin improvement in Q2, with stronger recovery from Q3 onward,” he said.