Geojit upgrades RBL Bank to 'Accumulate' despite 81% YoY drop in Q4 profit; here's why

RBL Bank reported a substantial decrease in its financial performance for the fourth quarter of the fiscal year 2025. The private lender's profit after tax (PAT) plunged by 80.5% year-on-year (YoY) to Rs 69 crore. 

Despite this, Geojit has upgraded RBL Bank's stock rating from 'Sell' to 'Accumulate', citing the bank's strategic focus on enhancing deposit granularity and expanding retail assets. The brokerage has set a revised target price of Rs 240, based on 0.8 times the FY27E book value per share. Geojit highlighted the bank's resilience in maintaining its branch network and customer engagement.

The bank's pre-provision operating profit fell by 2.9% YoY to Rs 861 crore due to a 7.2% increase in operating expenses. Although RBL Bank experienced a 4.1% YoY growth in interest income, reaching Rs 3,476 crore, driven by strong gains in secured retail and wholesale loan segments.

Interest expenses, however, rose by 10% year-on-year to Rs 1,913 crore in Q4 FY25. This increase in expenses was due to the elevated cost of deposits and funds, which resulted in a 2.3% decline in NII to Rs 1,563 crore. The net interest margin also slipped to 4.89% from 5.45% in the previous year, reflecting the pressure on the bank's core lending business.

Other income increased 14.2% YoY to Rs 1,000 crore in Q4 FY25, recording strong growth across core fee categories such as FX, processing fees, general banking, distribution, payment-related services, trade and others.

"The bank delivered resilient performance in the quarter, sustaining momentum across key business segments while maintaining its branch network and strengthening customer engagement. Continued focus on improving deposit granularity, expanding retail assets and optimising operational efficiency is expected to support balanced growth," Geejit said.

"While business fundamentals are improving, near-term margin pressures and a cautious approach in unsecured segments may limit the upside. However, strategic investments in digital initiatives and risk management are expected to enhance long-term competitiveness," it added.

Meanwhile, shares of RBL Bank settled 1.65 per cent lower at Rs 208.20. At this price, the counter has corrected 16.92 per cent in a year.