MOSL: RBL BANK (Buy)-In-line performance-margins continue to improve
RBL Bank: In-line performance; margins continue to improve
(RBK IN, Mkt Cap USD3.4b, CMP INR564, TP INR650, 15% Upside, Buy)
- RBL's 3QFY19 PAT was in line, increasing 36%/10% YoY/QoQ to INR2.25b (MOSLe: INR2.3b). NII grew 40% YoY to INR6.5b led by 35% YoY advances growth and 4bp QoQ expansion in margins to 4.12%. During 9MFY19, PPoP grew by 46% YoY, while PAT grew 36% YoY.
- Core fees grew 50% YoY (100% YoY growth in card fees). Strong opex control enabled 50% YoY growth in PPoP while C/I ratio stood stable at 51.6%.
- Loan book grew 35% YoY led by strong growth in retail book (51% YoY). The share of retail loans increased 206bp QoQ to ~43%. CASA deposits increased 38.5% YoY (9.6% QoQ) led by robust 56% YoY increase in CA deposits. CASA ratio improved 60bp YoY to 24.6%.
- GNPA increased 8% QoQ (1.38% of loans, -2bp QoQ) while NNPA increased 6% QoQ to INR3.6b (0.72% of loans, -2bp QoQ). Fresh slippages stood at INR2.1b (2.3% annualized). Calculated PCR increased to 48.5% (+100bp). Net stressed assets stood at 0.81% (v/s 1.15% in 3QFY18).
- Other highlights: RWA to total assets declined to ~78% as loans were rated externally resulting in stable Tier 1 ratio at 12.5% (CRAR of 13.8%). Additional disclosures on MFI/credit cards: (i) Bureau rejection rate increased to 33% as the bank changed its lending norms on MFI loans, (ii) cards portfolio grew to 1.43m (0.8m in FY18), (iii) credit card book increased to INR44.9b (9% of total loans), and (iv) retail spend per card remained healthy at INR10.5k.
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.
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