In this article, we are going to analyse RBL Bank Q1 FY2019-20 results update released on Friday, 19th July, 2019. Why did the stock fall after the results?
Reasons behind RBL Bank Stock Fall (19th July 2019)
Introduction
In this article, we are going to analyse the RBL Bank Q1 FY2019-20 results update released on 19th July, 2019. Why did the stock fall post results? Lets see what are the reasons behind RBL Bank stock fall after releasing Q1 results.
RBL Bank Q1 FY2019-20 Results Update
Q1 FY2019-20 Results
In the following table, RBL Bank Q1 FY2019-20 Results are shown:
NII is the difference between the interest earned and the interest expended. NII is the core or basic source of income for any bank.
For Q1 FY20, NII of RBL bank is Rs.817 Cr, grew by 48% y-o-y from Rs.553 Cr in Q1 FY19 last year. The growth in NII is 11% q-o-q as compared with NII of Rs.739 Cr in Q4 FY19.
Thus, a consistent growth is seen in NII of Bank y-o-y as well as q-o-q.
Non-Interest Income
Non-Interest Income is the income from corporate banking fees, trade/remmitance, processing fees, third party sale, transaction fees etc.
Non-Interest Income for Q1 FY20 is Rs.487 Cr from Rs.326 Cr in Q1 FY19 ie. increased by 48% y-o-y. While as compared with last quarter, it is increased by 11% from Rs.409 Cr in Q4 FY19.
Thus, this q-o-q and y-o-y growth in Non-Interest Income can be seen as a positive sign for the bank.
Total Net Income
Total Net Income has increased by 48% y-o-y Cr from Rs.879 Cr (Q1 FY19) to Rs.1,299 Cr in Q1 FY20.
As compared with Q4 FY19, Total Net Income has increased by 13% from Rs.1,148 Cr, which is a good signal towards for the bank’s total net income.
Operating Profit
Operating profit for Q1 FY20 is Rs.619 Cr which is grown by 43% y-o-y from Rs.432 Cr, in Q1 FY19.
On the otherhand, a growth of almost 11% q-o-q is seen in Q1 FY20 as compared with Q4 FY19 (Rs.560 Cr).
Thus, operating profits are increasing continuously on y-o-y as well as q-o-q basis.
Provisioning
The provisioning of Rs.427 Cr towards NPAs is done through the operating profit of Rs.619 Cr in Q1 FY20.
As compared with Q1 FY19, the provisioning has increased by almost 64% y-o-y (Rs.260 Cr) and grew by 17% q-o-q from Rs.365 in Q4 FY19.
Net Profit
Net profit in Q1 FY20 came out to be Rs.267 Cr, increased by 41% y-o-y from Rs.190 Cr in lasyt years’ Q1 (Q1 FY19). While, as compared with last quarter numbers, net profit has grown by 8% q-o-q from Rs.247 Cr in Q4 FY19.
A consistent and healthy growth in net profits for y-o-y and q-o-q is a positive sign for the bank.
Summary of Banlance sheet & Key Ratios
Advances, Total Deposits and CASA deposits
For Q1 FY20, Advances, Total Deposits and CASA deposits have seen a y-o-y grwoth of 35%, 35% and 43% respectively as compared with the numbers in Q1 FY19. While if the q-o-q growth is concerned, Advances, Total Deposits and CASA deposits have increased by 5%, 4% and 8% respectively.
Gross and Net NPA
Gross NPA in Q1 FY20 is 1.38% as compared with Q1 FY19 = 1.40% and Q4 FY19 = 1.38%.
On the other hand, net NPA has seen a slight decrease with 0.65% in Q1 FY20 as compared to Q1 FY19 = 0.75% and Q4 FY19 = 0.69%.
Why did RBL Bank stock fall post results?
When apperantly seen, net NPA numbers can demonstrate the muted record of NPAs. But according to the commentary by Mr.Ahuja, MD & CEO of RBL Bank, there is a likelyhood of increase in the NPA numbers of the bank in coming 2-3 quarters.
As far as bank’s portfolio is taken into the consideration, a certain level of stressed assets have emerged out. Due to a few of the stressed assets, bank’s Gross NPA can go up to 2-2.2%. As a result, credit cost can boost up to 35-40 basis points in coming quarters as per the requirement by the bank.
A very high level of leverage have been given to the borrower companies relative to the performance level and repayment capacity of these companies.
Mr. Ahuja has signalled for a possibility of erosion of the bank’s asset value in such kind of future stressed situation. As a result, the bank can face more accute challenges due to the associated risk in its portfolio.
Therefore, RBL bank may need a time for the recovery of the probable stressed assets in near future.
In the consequence of these commentary statements by the bank’s MD focusing on the concerns over bank’s future stressed assets, the market has given negative reaction for the RBL Bank stock. The stock has seen a fall of almost 13% despite posting 41% y-o-y growth in the Net profits.
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RBL Bank Q1 results: RBL Bank posted a 28.95 per cent rise in net profit to ₹371.52 crore for the April to June quarter of the financial year 2025 on Saturday, July 20. The interest income for the private bank increased 22.42 per cent to ₹3,496.24 crore in Q1 FY2025.
RBL Bank has TTM P/E ratio 12.29 as compared to the sector P/E of 9.23. There are 19 analysts who have initiated coverage on RBL Bank. There are 10 analysts who have given it a strong buy rating & 2 analysts have given it a buy rating. 5 analysts have given the stock a sell rating.
With a PEG ratio of 0.4 and high institutional holdings, RBL Bank is a stable and potentially profitable investment in the private banking sector. RBL Bank, a midcap private bank, has recently been downgraded to a 'Hold' by MarketsMOJO on 2024-07-08.
The bank had sanctioned a term loan to a corporation without conducting necessary due diligence on the viability and bankability of the projects. This non-compliance occurred as the bank did not ensure that the revenue generated from these projects was adequate to cover the debt servicing obligations.
RBL Bank's net profit rose to Rs.372 crore Year-on-Year (Y-o-Y) in the first quarter of FY25, up 29 per cent as compared to the Rs.288 crore in the previous corresponding period. The net interest income (NII) of the lender was up 19.5 per cent to Rs 1,699.9 crore, against Rs 1,422.3 crore in Q1FY24.
In 1970, it received a banking license from the Reserve Bank of India (RBI). In July 2010, Vishwavir Ahuja became managing director and CEO of the bank. In August 2014, the name of the bank was changed to RBL Bank Limited.
Private sector lender HDFC Bank reported 37.1 per cent growth in net profit for the quarter ended 31 March 2024 to Rs 16,512 crore, as compared to Rs 12,047 crore during the same quarter of the previous year.
"The Reserve Bank would like to state that the bank is well capitalised and the financial position of the bank remains satisfactory. As per half yearly audited results as on September 30, 2021, the bank has maintained a comfortable Capital Adequacy Ratio of 16.33 per cent and Provision Coverage Ratio of 76.6 per cent.
On a consolidated basis, ITC reported a 0.26 per cent YoY drop in profit at Rs 5,091.59 crore for the June quarter compared with Rs 5,104.90 crore in the same quarter last year. Revenue from operations rose 7.45 per cent YoY to Rs 20,029.60 crore compared with Rs 18,639.48 crore in the corresponding quarter last year.
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