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RBL Bank cracks over 15% on forecast of higher provisions in credit card biz

The stock has corrected more than 80 percent in last one year due to higher provisions for bad loans, withdrawal of deposits after Yes Bank crisis etc.

April 03, 2020 / 02:21 PM IST
 
 
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Shares of private sector lender RBL Bank plunged more than 15 percent intraday on April 3 after the management forecast rise in provisions from credit card business in the first quarter of FY21.

The stock has corrected more than 80 percent in one year due to higher provisions for bad loans, withdrawal of deposits after Yes Bank crisis, etc. It was trading at Rs 114, down Rs 17.35 or 13.21 percent on the BSE at 13.47 hours IST.

"Microfinance book was in good shape through March, but disbursals in microfinance will be a concern going ahead. We will see a rise in provisions on credit card business in Q1FY21," Vishwavir Ahuja, Managing Director & CEO at RBL Bank told CNBC-TV18.

Current spending in credit card business dropped to 40 percent, he said, adding but the net income of the bank is the highest in any quarter for Q4FY20.

The bank has managed to maintain its operating profit & liquidity position, he said, adding the revenue-generating and earning capacity remained strong.

On the deposits, Ahuja said the government deposits were in very low-single-digit now from a peak of 9 percent. "We expect deposits to stabilise in the coming quarters."

The Reserve Bank of India suddenly on March 5 put Yes Bank under 30-day moratorium period and set the withdrawal limit up to Rs 50,000 per person. This hit other small-medium private sector lenders as well.

"Maharashtra, particularly, withdrew money from some private banks. We have seen a decline in our wholesale book," Ahuja said, adding two-thirds of liability base is from retail customers.

RBL Bank in its BSE filing on March 1 said wholesale advances have been reflecting de-growth and retail advances are reflecting healthy growth during January-March quarter FY20.

The retail:wholesale advance mix approximately is 55:45.

"Asset quality position in legacy book consistent with guidance given in Q3 FY20; there is no material change. There was some increase in slippage in SME (wholesale) and retail largely on account of stress and inability to collect in the last few days because of the lockdown. However, overall, we expect lower slippages QoQ," said RBL which expects to increase provision coverage ratio sequentially.

The bank said it has strong operating performance during the quarter ended March 2020, reflecting franchise strength of the bank and its strong earning capacity despite economic slowdown and shutdown in the last few days.

"Net interest margin was at an all-time high. Net interest income growth was higher in Q4 than advances and balance sheet growth," it added.

Moneycontrol News
first published: Apr 3, 2020 02:21 pm

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