RBL Bank Ltd. share price target

RBL Bank is re-accelerating its growth phase with consistent asset quality by de-risking the credit card business (20.8% of loan book) and better quality corporate book (41.3% of book). The bank's the GNPA ratio to narrow down to 3.1% in FY23E. The wholesale book clean -up is behind us; the BB & below book (4.9%) is likely to squeeze further. We estimate ROA/ROE of 1%/8% in FY23E...

Background: RBL bank (RBL) came into operations in 1943 and was incorporated as a small, regional bank in Maharashtra with two branches in Kohlapur and Sangli. Post the change in the management team in 2010, it has been one among the fastest growing private sector banks and now has 429 interconnected branches and 389 interconnected ATMs spread across 28 Indian states and union territories serving ~8.4mn customers. The bank offers a comprehensive range of banking products and services customized to cater to the needs of large corporations, SMEs, agricultural customers, retail customers and development banking...

the previous quarter. The up-gradation & recoveries stood 7.8bn against 0.8bn in 3QFY21. Reported GNPA/NNPA/PCR: 4.34%/2.12%/72.2% against 1.84%/0.71%/86.4% in the previous quarter. The bank's NPA ratios down from Pro-forma GNPA/NNPA of 4.57%/2.37% in the prior quarter. The restructured asset grew 51bps to 1.41% of loan book. The BB + and below book stood at 5.7% of the total book. The BB & below pool (calculated) stood at ~4.9% of the net advances. Moreover, the A- and above book stood 77.6%. In 4QFY21, the bank's provisioning expenses increased 25.7% sequentially to 7.6bn v/s 6.1bn in the previous quarter. The total...

Heading in the right direction upgrade to ADD

RBL Bank's (RBK) Q4FY21 PAT of Rs 0.8bn declined 34% YoY due to an 11% fall in NII and accelerated provisions.

Continues to strengthen Balance Sheet

Stress created due to the Coronavirus pandemic seems to have eased for the banking sector.

RBL Bank Ltd. is a fast-growing private sector bank with a network of 403 branches and over 9 million customers. It offers various services, including corporate and institutional banking, commercial banking, retail banking,...

Background: RBL bank (RBL) came into operations in 1943 and was incorporated as a small, regional bank in Maharashtra with two branches in Kohlapur and Sangli. Post the change in the management team in 2010, it has been one among the fastest growing private sector banks and now has 392 interconnected branches and 389 interconnected ATMs spread across 28 Indian states and union territories serving ~8.4mn customers. The bank offers a comprehensive range of banking products and services customized to cater to the needs of large corporations, SMEs, agricultural customers, retail customers and development banking...

RBL Bank's 3QFY21 results indicated a steady normalization in credit cost. As the moratorium lifted, the collection in credit card segment (contributes 18.2%) almost reached the pre-Covid level. The restructured assets (0.9%) and BB and below pool (6% of advances) have high likelihood of crystallizing into NPLs after asset classification resumes. However, the provisioning expense of 6.1bn (5.3bn in 2QFY21) has translated into substantial improvement in PCR to 86.4%. Moreover, the Covid provisioning (6.64bn) stood 121bps of net advances. The bank witnessed 15bps decline in NIMs to 4.19% because of proactive reversal of interest income on pro-forma NPA. As expected the bank reported a muted credit growth of 0.5% sequentially. We estimate the growth to remain...