RBL Bank reports steady growth in Q2 FY25 with 24% rise in operating profit

RBL Bank Limited has reported a steady financial performance for the second quarter of FY 2024-25, marked by a notable 24% year-over-year increase in operating profit. The bank’s board approved the unaudited financial results on 19th October 2024, highlighting growth in key financial areas despite prevailing economic challenges.

Financial Highlights: Operating Profit and Income Surge

For Q2 FY25, RBL Bank’s operating profit reached ₹910 crore, a 24% increase compared to the same period last year. The rise is attributed to effective cost management and improved margins. The net interest income (NII) also showed growth, increasing by 9% YoY to ₹1,615 crore, while the net interest margin (NIM) stood at 5.04%, reflecting the bank’s consistent focus on optimizing returns.

Other income witnessed a substantial 32% YoY growth, reaching ₹927 crore, supported by a surge in core fee income, which rose 21% YoY to ₹822 crore.

Deposit Growth and Advances Strategy

RBL Bank’s total deposits for the quarter grew by 20% YoY to ₹107,959 crore. The bank continues to prioritize granular deposits, with accounts under ₹3 crore increasing by 22% YoY. The CASA (current account and savings account) ratio was reported at 33.6%, indicating steady customer acquisition and retention efforts.

On the lending front, the bank’s net advances expanded by 15% YoY, reaching ₹87,882 crore. A strategic focus on retail advances saw this segment grow by 24% YoY to ₹54,723 crore. The bank’s balance between retail and wholesale advances remains strong, maintaining a 62:38 mix.

Strong Capital Position and Improved Asset Quality

The capital adequacy ratio improved to 15.9%, up from 15.6% in the previous quarter, with the Common Equity Tier 1 (CET1) ratio rising to 14.2%. Liquidity coverage remained robust at 133% for H1 FY25, underscoring the bank’s resilience and liquidity management capabilities.

RBL Bank also reported improvements in asset quality, with the gross non-performing assets (GNPA) ratio falling to 2.88% from 3.12% a year ago. This decline highlights the bank’s focus on managing and mitigating credit risk effectively. The provision coverage ratio (PCR), including technical write-offs, was recorded at 89.35%, further solidifying its financial health.

Expert Insight: CEO’s Strategic Outlook

R Subramaniakumar, Managing Director and CEO of RBL Bank, emphasized the bank’s progress, noting that the consistent rise in operating profit reflects the success of their strategic initiatives. He mentioned that while market conditions present short-term hurdles, the bank’s long-term objectives remain intact, with the ‘One Bank’ approach beginning to show positive results across multiple product lines.

Expansion and Customer Growth

The bank is expanding its distribution network, with a total of 1,882 touchpoints, including 550 branches and 1,332 business correspondent branches. The customer base has also grown, now serving over 16.06 million individuals as of September 30, 2024, compared to 14.31 million in the same period last year.