RBL Bank has enough capital to sustain till mid-FY21 - CMD

Small-sized private sector lender RBL Bank Thursday reported a 39 per cent jump in March quarter net income at Rs 247.2 crore on a healthy core income which cushioned a spike in provisioning for dud assets. For fiscal 2019, the bank reported a net income of Rs 867 crore, up 37 percent over the previous year. In the reporting quarter core, net interest income rose 48 percent to Rs 738.7 crore, on a 35 percent loan growth and widening of net interest margin to 4.23 percent from 3.98 percent in the year-ago period. The city-based bank's non-interest income grew 31 percent to Rs 409.2 crore.

Even as the ratio of sour assets came down, its overall provisions nearly doubled to Rs 200 crore from Rs 112 crore a year ago, primarily due to its micro-lending and agri books, managing director and chief executive Vishwavir Ahuja told reporters. He said the stress in both these segments was due to external events like demonetisation and farm loan waivers, stressing that in the micro-lending book, the entire stress due to the note-ban has been absorbed, while a part of provisioning remains in agri-loans.

The provision coverage ratio increased to 65 percent as a result of the additional money set aside, and Ahuja said the bank is comfortable at this level and will help reduce credit costs in the next fiscal year, as the bank is confident of getting the numbers down to 1 percent in FY20 from 1.10 percent in FY19. The bank's board approved a Rs 3,500-crore fund raising plan to shore up its core capital which will be taken to the shareholders later. Ahuja said the bank has enough capital to sustain till mid-FY21, but this is an enabling provision.

It will raise money anytime during the next 18 months. Loan growth during the year was driven largely by retail, taking the share of its non-wholesale book to 44 percent, Ahuja said. Unsecured assets, which constitute 34 percent of the book, also grew healthy, but Ahuja said he does not intend to take their proportion higher than the present levels. The RBL Bank scrip closed 0.71 percent down at Rs 676.10 on the BSE, as against a 0.34 percent correction on the benchmark on profit booking after hitting new life-time highs during the trade.