RBL Bank on Tuesday reported over 47 per cent decline in standalone net profit at Rs 141.22 crore in the first quarter ended June of the current fiscal year due to over two-fold jump in provisioning. Moreover, RBL Bank said it made COVID-19 related provisions of Rs 240 crore in Q1FY21 and total cumulative provisions of Rs 350 crore in Q4FY20 and Q1FY21.
In addition, provisioning for bad loans and contingencies more than doubled to Rs 500.16 crore from Rs 196.95 crore in the June quarter of 2019-20. The bank reported a substantial spike in its gross non-performing assets (NPAs) or bad loans, which stood at 3.45 per cent of gross loans as on June 30, 2020, as against 1.38 per cent a year ago.
In other words, in the context of NPA, it should be as low as possible because it signifies what per cent of loans have interest overdue for more than 90 days.
In order to better understand banking jargon go through this article. You can find the company’s press release here.
| Metrics | Q1FY21 (in crores) | Q1FY20 (in crores) | Change |
| Net Profit | 141.22 | 267.05 | -47% |
| Total Income | 2,568.32 | 2,503.88 | +2.6% |
| Net NPA | 1.65% | 0.65% | -1% |
Moreover, on coronavirus pandemic and its impact, the bank said the continued slowdown has resulted in lower loan origination, trade and forex transactions, sale of third party products, use of credit and debit card by customers and efficiency in collection efforts.
“The continued slowdown is likely to increase customer defaults, requiring the bank to increase credit-related provisions,” RBL Bank said.
“The quarter was a mixed bag. While on one hand, rising infection rates added to uncertainty, on the other hand, as we transitioned to unlocking in large parts of the country we saw business activity pick up sharply in the second half of the quarter,” RBL Bank MD and CEO Vishwavir Ahuja said.
Furthermore, on a consolidated basis, the bank’s net profit fell 42 per cent to Rs 154.42 crore during June 2020 quarter as against Rs 265.42 crore a year ago.
In conclusion, RBL bank is hopeful that it’ll be able to maintain surplus liquidity while keeping tight risk filters in the near term to keep the NPA in check.