MOSL: RBL BANK (Buy)-Business growth robust-margins continue improving
RBL Bank: Business growth robust; margins continue improving
(RBK IN, Mkt Cap USD4.1b, CMP INR676, TP INR800, 18% Upside, Buy)
- RBK's PAT increased 39% YoY (+10% QoQ) to INR2.5b in 4QFY19, in line with our estimate of INR2.4b. NII rose 48% YoY to INR7.4b, led by 35% YoY growth in advances and 11bp QoQ expansion in margins to 4.23%.
- Core fees grew 43%/12% YoY/QoQ to INR3.9b, driven by retail fees (~70% of total fees). Strong opex control drove 46% YoY growth in PPoP, while the C/I ratio was stable at 51.2% v/s 51.6% in the previous quarter.
- Loan book grew 35% YoY, led by strong growth in retail book (49% YoY), while wholesale book grew at 25% YoY. The share of retail loans was up 141bp QoQ at ~44%. CASA deposits rose ~37% YoY (+14% QoQ), led by a robust 54% YoY increase in SA deposits. CASA ratio was at 25% (+40bp QoQ).
- GNPA increased 8.5% QoQ to INR7.5b (1.38% of loans, flat QoQ), while NNPA rose 4% QoQ to INR3.7b (0.69% of loans, -3bp QoQ). Fresh slippages stood at ~INR2.1b (2.0% annualized). Calculated PCR increased to 50.6% (+211bp). Net stressed assets stood at 0.73% (v/s 0.81% in 3QFY19).
- Other highlights: (i) RBK has taken board approval to raise capital up to INR35b. (ii) RWA to total assets declined to ~74% v/s ~78% in 3QFY19, resulting in a tier 1 ratio of 12.1% (CRAR of 13.5%). (iii) Additional disclosures on MFI/credit cards: (a) MFI book increased to INR50.3b (~9% of total loans), (b) cards portfolio grew to 1.71m (0.8m in FY18), (c) credit card book was up to INR52.8b (~10% of total loans) and (d) retail spend per card was healthy at ~INR10k.
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.
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