RBL Bank – Q1FY21 Concall Takeaways.

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Before we delve deeper into the concall takeaways, here are the result and takeaways –

Local lockdowns are there so uncertainty is still there.

Growth expected only to come back in Q4.

For Rural and Agri business – DBT and MNREGA was positive. Stimulus helped.

Continue to remain focused on balance sheet.

Had a satisfactory quarter but as a prudential measure increased PCR oy over 6% to over 70.5%. Taken additional COVID provisions as well.

Performance Highlights – Advances were flat YoY, Retail wholesale mix 53%-47%, wholesale business declined 18% YoY, Total deposits 7% up QoQ.

Deposit traction strong during this quarter leading to surplus liquidity of over 13000 Cr, LCR 164% for Q1FY21. The bank will gradually unwind this high liquidity as retail and wholesale opportunities come up again.

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Cost of deposits focus to continue. To increase granularity. 6.27% Cost of deposits. Recently cut rates. Expected to trend even lower in coming quarter.

CASA – Grew 18% YoY, 8% QoQ. 30% crossed for first time, 31.3% in Q1FY20.

Moratorium – Overall book at 13.7% by value for the bank as a whole. As against 33% in previous quarter. Within this wholesale 5%, compared to 22%. Cards from 24% down to 21%.

Retail Portfolio – taken additional provisions.

Asset Quality – GNPA 3.45% now vs 3.62%, NNPA now 1.65% vs 2.05% (QoQ)

Total of Rs 350 cr COVID provisions till now, translating to 63 basis points of advances. Majority of this is towards 10% of credit card book under moratorium.

CAR of 16.35%, CET 15.2%

Micro banking – All branches open. MSME slow to pick up. Low demand and disruption are the twin problems for them. Disbursed 192 crs under credit guarantee scheme, to good businesses.

Individual Segment – Some confidence restored.

Credit Card segment – Moratorium reduced from 24% to 21% by value. Around 11% of card customer by number is in moratorium.

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Customer spends – Pick up from May onwards. June spending levels 78% of March and now 84% of March.

New business origination – Started in only mid-June. Micro banking no new loans, 1 month of full collections. Since July started in micro-banking. Will pick up pace now, but only post 1 month of moratorium opening and 1 month full of collections, will accelerate.

Credit Cards – Now the number stands at 2.7 million cards, flat growth. Reduced risk, blocked cards (for moratorium customers as well). In June, Card spends was Rs 7450 vs Rs 9000.

Enhanced collection team by 1.6 times.

Cards on time payment moved to 84%

Majority of customers knew the extra cost of moratorium and hence majority paid.

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