RBL net jumps 41%, but warning on NPAs sends stock diving 14%

Small-sized private sector lender RBL Bank Friday posted a 41 percent growth in June quarter net at Rs 267.1 crore, but guided towards a spike in dud assets due to the exposures to a few troubled corporate entities. The warning during trading hours sent its stock hurtling down up to 15 percent and closing with a massive loss of 13.7 percent at Rs 500.35 on the BSE.

The bank expects the gross non-performing assets ratio to shoot up to 2.5 percent during the remainder of the year from 1.38 percent in the June quarter, due to the exposure to some distressed companies, managing director and chief executive Vishwavir Ahuja told reporters. He said the under Rs 1,000-crore of exposure, representing 1.75 percent of its total assets, can slip into NPAs due to various issues, including liquidity troubles, promoters' inability to sell stakes in a choppy market and high interest rates.

He warned that this will hit the profitability and the run-rate may dip to mid-to-high 20s for the full fiscal. Ahuja, however, did not name the accounts or the sectors they come from, but underlined that these are exposures to four corporate groups and not necessarily sectoral troubles and was quick to add that all the exposures which are doubtful are standard and performing at present.

The bank has also decided not to make any contingent provisions either and will take comfort from the elevated provision coverage ratio at 69.13 percent, Ahuja said. Comments come amid a slew of troubles being faced by non-banking lenders like DHFL and Anil Ambani group companies, and media group like Zee due to promoter's dalliances.

Ahuja said the bank has no exposure to the realty sector, while its exposures to NBFC and construction sectors are to the best-rated and well-doing borrowers. Core net interest income jumped 48 percent to Rs 817.3 crore during the reporting quarter on a expansion in net interest margin to 4.31 percent from 4.04 percent year ago and a 35 percent growth in advances led by retail.

Other income also grew 48 percent to Rs 481.2 crore during the reporting quarter. The capital adequacy ratio slipped to 12.07 percent from a high 14.23 percent in the year-ago period.

The bleak management commentary rattled investors and the bank scrip tanked 13.71 percent to Rs 500.35 on the BSE Friday on a day when the benchmark plunged 1.44 percent..