RBL Bank Q3 Results Review - Strengthening Net Interest Margin; Asset Quality Outlook Improves: Dolat Capital
Bank reported a good quarter with better than expected NII, operating profits, 20 bps sequential expansion in NIM, lower slippages
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Dolat Capital Report
RBL Bank Ltd. reported a good quarter with better than expected net interest income and operating profits, 20 basis points sequential expansion in net interest margin to 4.7%, and lower slippages.
Asset quality metrics improved QoQ, with moderation in slippages to 3.7% (5.2% in Q2) and decline in restructured book to 1.4% (1.9% in Q2).
RBL Bank's sequential loan growth was led by wholesale and credit card portfolios (up 5-6% each) followed by micro finance institution (up 10%) and home loan (up 20%).
With MFI book out of woods (3% of restructured pool), slippages and credit costs are expected to moderate. However, elevated opex ratios limit return on assets to sub 1% over the medium term.
Given the introduction of several new products, growth trends should be healthy but execution remain key.
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