Higher provisions and stressed assets weigh on profitability; ARC transfers and stable income offer partial relief
RBL Bank posted a net profit of ₹200 crore in the first quarter of FY26, down 46% year-on-year from ₹371.5 crore in Q1 FY25. However, the bank showed a strong sequential recovery from ₹69 crore in Q4 FY25, aided by operational improvements and provisioning reversals. The bank’s total standalone income rose marginally to ₹4,510 crore from ₹4,476 crore in the preceding quarter, driven by steady interest income of ₹3,441 crore and a rise in other income to ₹1,069 crore.
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Q1 FY26 Net Profit: ₹200 crore
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Q1 FY25 Net Profit: ₹371.5 crore
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Q4 FY25 Net Profit: ₹69 crore
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Other Income (QoQ): ₹1,069 crore vs ₹1,000 crore
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Operating Profit and Provisions Weigh on Performance
The bank’s operating profit before provisions declined to ₹702.9 crore from ₹861 crore in Q4 and ₹859 crore in Q1 last year. Provisions for the quarter stood at ₹442 crore—lower than ₹785 crore in Q4 FY25 but higher than ₹366 crore in the same period last year. The elevated provisioning level offset improvements in fee income and asset recoveries, thereby constraining bottom-line growth.
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Operating Profit (Q1 FY26): ₹702.9 crore
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Provisions (Q1 FY26): ₹442 crore
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Provisions (Q4 FY25): ₹785 crore
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Provisions (Q1 FY25): ₹366 crore
Asset Quality Mixed; GNPA Rises in Rupee Terms, Ratio Improves
RBL Bank’s gross NPAs (GNPA) increased in absolute terms to ₹2,685.9 crore, but the GNPA ratio improved slightly to 2.78% from 2.60% in Q4 FY25 due to portfolio expansion. Net NPAs stood at ₹428.8 crore, with the Net NPA ratio rising to 0.45% from 0.29% sequentially. The bank’s asset clean-up included a transfer of ₹975 crore worth of stressed credit card and corporate loans to Asset Reconstruction Companies (ARCs), which led to ₹47.8 crore of provisioning reversals and a ₹48 crore consideration inflow.
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GNPA (Q1 FY26): ₹2,685.9 crore | GNPA Ratio: 2.78%
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NNPA (Q1 FY26): ₹428.8 crore | NNPA Ratio: 0.45%
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ARC Transfer Value: ₹975 crore
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Provision Reversal: ₹47.8 crore
RoA Declines, Net Worth Stable, Capital Base Expands Marginally
Return on Assets (RoA), a key profitability metric, remained weak and below the 1.14% reported in Q1 FY25. The bank’s net worth stood at ₹14,957 crore. During the quarter, RBL Bank allotted 11.3 lakh equity shares under its ESOP scheme, slightly increasing its paid-up capital, though it had minimal dilution impact.
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Net Worth (Q1 FY26): ₹14,957 crore
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RoA: Below 1.14% YoY benchmark
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Equity Shares Issued: 11.3 lakh (via ESOP)
CEO Commentary: Focus on Balance Sheet Clean-up and Retail Recovery
RBL Bank’s CEO, R Subramaniakumar, emphasised the bank’s intent to stabilise asset quality and drive profitable growth in the results filing. “We have taken significant steps to cleanse our balance sheet and improve profitability. Retail stress is being actively managed, and we are seeing early signs of recovery,” he stated.
