RBL Bank Pre-IPO Review - Impressive Asset Growth but Return Ratios Lagging

RBL Bank IPO - A Lot of Hope and Strong Momentum Might Help, but Upside Remains Limited

Senior investment analyst

Pallavi Deshpande

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/22856" target="_blank" data-smartkarma-citation="entities:22856:1">RBL Bank Ltd (RBK IN)</a> net profit grew 68% YoY for 2Q18 and was better-than consensus expectations. However, Pre Provision Operating Profit (PPOP) grew 38% YoY with provisions flat (as provisions for 2Q17 included a one-off charge for a 10% stake acquisition in Utkarsh Microfinance). PPOP was driven by NIM increasing 20 bps  QoQ to 3.74% and trading income growth of 73% YoY. NIM improved due to a shift in the advances portfolio to retail (+41% YoY) and an increase in the credit to deposit ratio…</p>

RBL Bank Ltd (RBK IN) net profit grew 68% YoY for 2Q18 and was better-than consensus expectations. However, Pre Provision Operating Profit (PPOP) grew 38% YoY with provisions flat (as provisions for 2Q17 included a one-off charge for a 10% stake acquisition in Utkarsh Microfinance). PPOP was driven by NIM increasing 20 bps  QoQ to 3.74% and trading income growth of 73% YoY. NIM improved due to a shift in the advances portfolio to retail (+41% YoY) and an increase in the credit to deposit ratio…

RBL Bank: Asset Growth Offset by Rising Operating Costs