RBL Bank share price fell 20% in trade today after the private sector lender reported a 73.4 percent fall in net profit year-on-year due to a sharp spike in provisions with asset quality deteriorating sequentially. At open, RBL Bank share price was stuck in the lower circuit of 10% or a 28.65 points loss at Rs 258.25 compared to the previous close of Rs 286.90 on BSE. Amid intense selling pressure, the circuit limit was revised to 20% later. That saw the stock crashing 19.64% to Rs 230.55 on BSE.
RBL Bank share has lost 56.49% since the beginning of this year and fallen 46.06% during the last one year.
The bank said net profit fell to Rs 54.31 crore in Q2 compared to the previous close of Rs 204.54 crore reported in the year-ago period after provisions for stressed accounts quadrupled to Rs 533 crore from Rs 140 crore a year earlier.
"As a matter of prudence, we have taken higher than required provisions on these accounts which have impacted our bottomline," Vishwavir Ahuja, MD & CEO, RBL Bank said.
The bank expects to return to normalised earnings trajectory by end of this fiscal, he added. Gross non-performing assets rose to 2.60% in Q2 of current fiscal compared to 1.60% GNPAs of total assets in the corresponding quarter of previous fiscal. Net NPAs rose 91 basis points to 1.56% in Q2 compared to 0.65% in Q1 of the current fiscal.
In Q1 of last fiscal, net NPAs stood at 0.74% of total assets. However, other income rose 32.5 percent and pre-provision operating profit climbed 41.6 percent for the quarter ended September 2019. The lender had highlighted in July end, given the difficult corporate credit environment it had faced challenges in a few corporate accounts. CEO Vishwavir Ahuja had raised concerns over some of the bank's exposures in the near future.
"Given the difficult environment we do expect to face some challenges on some of our exposures in the near term. At the same time, given the strong momentum in our businesses, we do expect to maintain a healthy profitable growth over the coming quarters," Vishwavir Ahuja had said while commenting on the performance of June quarter results.
In the first quarter of current fiscal, the lender had reported a 41 per cent growth in net profit at Rs 267.1 crore for the first quarter ended June 30, 2019, as against Rs 190.04 crore in the same quarter last year. RBL Bank's net interest income (NII), which is the difference between interest earned on loans and that paid on deposits, grew 47.88 per cent to Rs 817.32 crore in April-June quarter of FY20, compared to Rs 552.7 crore in the corresponding quarter.
RBL Bank's asset quality improved during June quarter, with gross non-performing assets (NPAs) ratio-bad loans as a percentage of gross advances - falling to 1.38 per cent versus 1.40 per cent in the year-ago quarter. Net NPA declined to 0.65 per cent during June quarter as compared to 0.75 per cent in the corresponding quarter last year.
However, provisions and contingencies of the bank increased to Rs 213.18 crore from Rs 140.35 crore in the year-ago period.
By Aseem Thapliyal