RBL’s asset quality is stable, no singular cause for worry: Vishwavir Ahuja
"Revenue growth has been strong. Advances have increased 25% and NIM is at an all-time high of 4.12%."
By Joel Rebello, ET Bureau |
RBL Bank on Monday reported a 36% rise in net profit despite an increase in provisions for any future bad loans, particularly in the agriculture sector. In an interview with Joel Rebello and Ashwin Manikandan, RBL Bank’s chief executive Vishwavir Ahuja said provision coverage ratio is likely to go up to 65% to ensure that the bank is well covered.
Edited excerpts:
What was the highlight of this quarter?
Our numbers tracking well in all aspects, interest income growing by 40% and non-interest income by 45%. Overall growth in revenue has been strong. Advances have increased 25% and NIM is at an all-time high of 4.12%, up from 3.89% a year ago.
Why have you increased provisions this quarter?
We had said that we would increase provision coverage ratio (PCR) and we've followed that in every quarter. PCR is up from 55% in April to 63.2% this quarter, and we plan to increase it further, may be to 65%. It is to ensure that we're well covered and our profits are allowing us to do that. The spike in provisions is for a good cause. The asset quality is stable and there is no singular cause for worry.
What are the slippages this quarter?
There is a slightly higher provisioning in the agri portfolio. In all other businesses, the provisions have been standard, well contained and below the historical numbers; only in the agri portfolio it's higher. We have presence in a lot of states and the farm loan waivers that have built over time, for that we have now started to take provisions. We may get back some, depending on how much is paid back by the state governments. We have taken Rs 50-60 crore of additional provisions. About 40% of the total provisions is from agriculture.
What’s your guidance in terms of credit cost?
Edited excerpts:
What was the highlight of this quarter?
Our numbers tracking well in all aspects, interest income growing by 40% and non-interest income by 45%. Overall growth in revenue has been strong. Advances have increased 25% and NIM is at an all-time high of 4.12%, up from 3.89% a year ago.
Why have you increased provisions this quarter?
We had said that we would increase provision coverage ratio (PCR) and we've followed that in every quarter. PCR is up from 55% in April to 63.2% this quarter, and we plan to increase it further, may be to 65%. It is to ensure that we're well covered and our profits are allowing us to do that. The spike in provisions is for a good cause. The asset quality is stable and there is no singular cause for worry.
What are the slippages this quarter?
There is a slightly higher provisioning in the agri portfolio. In all other businesses, the provisions have been standard, well contained and below the historical numbers; only in the agri portfolio it's higher. We have presence in a lot of states and the farm loan waivers that have built over time, for that we have now started to take provisions. We may get back some, depending on how much is paid back by the state governments. We have taken Rs 50-60 crore of additional provisions. About 40% of the total provisions is from agriculture.
What’s your guidance in terms of credit cost?
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About 30 basis points this quarter and if we're to annualize it, it comes to 120 basis points. The extra 20 basis points is coming because of factors I'd explained. For the previous quarter, it was microfinance; this quarter it is agri. From next year, we expect it to be around 100 basis points.Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
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