RBL Bank stock gains 2.5% following healthy December quarter business update

Shares of RBL Bank ended higher at ₹166.80 apiece in trade on Monday, January 6, marking a 2.46% gain compared to the previous close as investors reacted positively to the bank's December quarter business update, which was released over the weekend. With today's rally, the stock has risen for the third day and gained 5.6% in the current month so far.

Q3 business update

RBL Bank reported a 15% YoY jump in its deposits, reaching ₹92,746 crore in Q3FY25, while on a sequential basis, deposits were down by 1%. Deposits greater than ₹3 crore grew sharply by 30% YoY to ₹44,882 crore, while on a QoQ basis, they were up by 3%.

Retail advances grew 20% YoY, while wholesale advances grew 5% YoY for the quarter ended December 31, 2024. Within the wholesale segment, commercial banking advances grew 21% YoY. Within the retail segment, secured retail advances (excluding credit cards and microfinance) grew 37% YoY. The mix of retail to wholesale advances was approximately 61:39.

The current bucket collection efficiency for microfinance advances was 98.4% for the month of December 2024, compared to 97.51% for the month of September 2024.

The bank said it continues to focus on growing the share of granular retail deposits in its overall deposit mix, with deposits below ₹3 crore constituting approximately 50.3% of the bank's total deposits as of December 31, 2024, as per the regulatory filing. 

For the September quarter (Q2FY25), the bank reported a 24% YoY and 40% QoQ drop in standalone net profit, which stood at ₹223 crore. The net interest income (NII) came in lower, impacted by interest reversals from slippages and reduced disbursements in high-yielding segments. The bank reported a net interest margin (NIM) of 5.04%, the lowest in the last five quarters.

The bank's provisions surged by 69% to ₹640 crore, compared to ₹366 crore in the previous quarter, driven by higher slippages in the credit card and microfinance portfolios. Many brokerages cut their target multiples on the stock following the Q2 numbers, which led to a sharp 17.10% drop in share value during October, followed by a 9% drop in the following month.

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