Shares of RBL Bank fell by as much as 14% to ₹176.50 on the BSE on October 21, following the announcement of a 24% decline in net profit for Q2 FY25. The bank reported a net profit of ₹223 crore for the September 2024 quarter, down from ₹294 crore in the same period last year and ₹372 crore in the June quarter. The dip in profit is primarily attributed to asset quality issues in its credit card and microlending portfolios.
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RBL Bank’s CEO, R Subramaniakumar, explained that the stress in the microfinance sector is linked to industry-wide challenges, while the problems in the credit card segment are due to internal factors. The latter is influenced by the bank’s decision to transition credit card loan collections in-house, which is expected to stabilize by the end of Q3 FY25.
Fresh slippages doubled to ₹1,026 crore in the quarter, with nearly 70% coming from the credit card segment and the rest from microfinance. These slippages significantly impacted the bank’s asset quality.
Despite the challenges, RBL Bank’s operating profit increased by 28% year-on-year to ₹1,769 crore, while its net interest income (NII) grew by 14% to ₹3,315 crore. However, the bank’s net interest margin (NIM) fell to 5.04% from 5.54% last year and 5.67% in June 2024.
NIM, a key profitability metric, reflects the difference between the interest earned on loans and the interest paid on deposits, indicating how effectively a bank uses its assets and liabilities.
