MOSL: RBL BANK (Buy)-Strong growth with improving profitability and healthy asset quality
​RBL Bank: Strong growth with improving profitability and healthy asset quality
(RBL IN, Mkt Cap USD2.1b, CMP INR524, TP INR665, 27% Upside, Buy)
- RBL's 2QFY18 PAT increased 68% YoY (7% below estimate), mainly due to opex missing estimates by 5% (higher expansion costs), despite total income (INR6.6b, +4%/+40% QoQ/YoY) being largely in line with estimates. Key positives are: a) Loan growth of 8% QoQ and 35% YoY. b) Fee income growth of 38% YoY, driven by a 150% increase in distribution/CC fees. c) Margin improvement of 20bp QoQ to 3.7%, driven partly by a reduction in cost of funds from CASA inflows and partly by capital from QIP.
- Absolute GNPAs increased 6% QoQ (+77% YoY) to 1.44% of loans (-2bp QoQ). Sequential decline in asset quality was caused by a 30%/20% increase in DB&FI/BBB portfolios, where GNPA ratios stood at 2.81%/1.49% (+42bp/+8bp QoQ), while asset quality in Commercial Banking improved with a decline in GNPA to 2% from 2.6% in the earlier quarter.
- Loan growth was led by non-wholesale book growth of 41% YoY, increasing the share of non-wholesale to 40.4% from 38.8% a year ago. Strong CASA growth of 56% YoY (ahead of deposit growth of 31% YoY) led to CASA ratio improving 380bp YoY (+160bp QoQ) to 23.7%.
RBL Bank Limited is a banking company. The Bank is engaged in providing a range of banking and financial services, including commercial banking, retail banking, agriculture finance and financial inclusion, treasury operations and other banking related activities. The Bank's segments include Corporate/Wholesale Banking, which includes lending, deposits and other banking services provided to corporate customers of the Bank; Retail Banking, which includes lending, deposits and other banking services provided to retail customers of the Bank through branch network or other approved delivery channels; Treasury, which includes investments, all financial markets activities undertaken on behalf of the Bank's customers, trading, maintenance of reserve requirements and resource mobilization from other Banks and financial Institutions, and Other Banking Operations segment, which includes para banking activities, such as Bancassurance and credit cards.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.