RBL Bank Ltd Q4 FY22 Earnings Conference Call Insights

Key highlights from RBL Bank Ltd (RBLBANK) Q4 FY22 Earnings Concall

Management Update:

• RBLBANK said its profitability has been better again in 4Q22, and added that it expects it to improve further in the coming quarters as its interest-earning assets increase, and the composition of retail grows up.

Q&A Highlights:

• Nitin Aggarwal of Motilal Oswal asked about fee income as a percentage of spend coming down. Jaideep Iyer Head of Strategy replied that RBLBANK has reversed approx. INR50 crores of card fee income across late payment charge and over-limit charges. So adjusting for INR50 crores it will be sequentially flattish.

• Nitin Aggarwal of Motilal Oswal asked about the collection efficiency in the restructured portfolio currently and how much slippages RBLBANK is building from this portfolio. Jaideep Iyer Head of Strategy answered that it’s not a large part of the restructured book. The largest part of the restructured book in the retail side is secured loans. About 10%, 15% of the book has come out of restructured book, which is encouraging.

• Kunal Shah from ICICI Securities enquired about opex, the margin trajectory was strong, but still cost to income was about 60%-odd. Jaideep Iyer Head of Strategy answered that until the time RBLBANK grows its businesses back, which will take maybe a couple of quarters, it will have this challenge where costs have to grow.

• Rupesh Tatiya of Intelsense Capital asked about credit card challenges from Bajaj and NBFCs. Rajeev Ahuja MD said that the bank doesn’t  see any challenges for its growth either from Bajaj or otherwise. With Bajaj, RBL said its plans are very set for the next 3-4 years. Other than Bajaj, RBL doesn’t deal with any other NBFC.

• Rupesh Tatiya of Intelsense Capital asked that with this two-third, one-third retail/wholesale split, what kind of gross slippages do RBL see in a normalized environment. Rajeev Ahuja MD said that a model cost of credit for the portfolio should be in the 2-ish range from a long-term perspective.

• Manish Shukla from Axis Capital asked that on the rising rate environment, how RBL is looking at changing TD and SA rates. Jaideep Iyer Head of Strategy answered that RBLBANK will be lazy to increase clearly because it’s on the higher side. So this will be an opportunity to narrow the gap by either cutting less than what was earlier planned or not raising on the SA side at least.

• Manish Shukla from Axis Capital also asked if for RBL the entire wholesale book plus home loan in retail would be floating. Jaideep Iyer Head of Strategy answered that RBLBANK will only have realistically the cards and micro finance book, which is fixed rate, almost everything else materially would be floating.

• Mahesh M.B. with Kotak Securities asked the reason for the difference between consolidated and stand-alone being high. Jaideep Iyer Head of Strategy said the bank made a loss of approx. INR90 crores in its subsidiary because their earnings are basally interest-earning book, and RBL went slow in micro finance.

• Rohan Mandora from Equirus asked about the timeline with respect to MD and CEO appointment. Rajeev Ahuja MD replied that it’s in the final leg. The timeline cannot be detailed; it is with the regulator now. So it should be soon.

• Rohan Mandora from Equirus enquired about the PSL level for the bank and if the bank is PSL surplus right now. Jaideep Iyer Head of Strategy said that RBLBANK would be falling short by about 4-5%.

• Rohan Mandora of Equirus asked about the tech spend as a percentage of total opex. Jaideep Iyer Head of Strategy answered that it’s 7-8%, which is only opex. Capex will be different.