RBL Bank Net Profit Slumps 46% to ₹200 Crore in Q1 FY26 Due to Higher Provisions; CEO Predicts Margin Recovery from Q3
RBL Bank reported a 46% year-on-year decline in net profit to ₹200 crore for the first quarter of FY26, impacted by higher provisioning despite a sequential improvement from ₹69 crore in Q4 FY25. The bank’s performance lagged the ₹371.5 crore posted in Q1 FY25, reflecting a challenging operating environment.
Speaking during the earnings call, MD & CEO R Subramaniakumar stated, “Margins have bottomed out, and we expect to see recovery starting from Q3.” He added that recent cuts in deposit rates are likely to influence cost structures positively in Q2 and Q3.
Operating Metrics at a Glance:
- Total income (standalone): ₹4,510 crore (vs ₹4,476 crore in Q4 FY25)
- Interest income: ₹3,441 crore (steady from last quarter)
- Other income: ₹1,069 crore (up from ₹1,000 crore)
- Operating profit (before provisions): ₹702.9 crore (vs ₹861 crore in Q4, ₹859 crore YoY)
- Provisions: ₹442 crore (down from ₹785 crore in Q4 but up from ₹366 crore YoY)
The bank cited higher provisioning and operating expenses as the primary reasons for the profit slump. Operating expenses rose to ₹1,847 crore in Q1 FY26 compared to ₹1,646 crore a year ago. However, Subramaniakumar assured investors that cost optimisation strategies would begin reflecting positively by the end of Q2.
Despite short-term headwinds, RBL Bank reaffirmed its medium-term outlook, targeting a 14-15% growth trajectory. The return on assets (RoA) declined to 0.56% from 1.14% a year earlier.
Asset Quality and Capital Health
- Gross NPA: ₹2,685.9 crore (vs ₹2,377.8 crore YoY)
- Net NPA: ₹428.8 crore (improved from ₹638.9 crore)
- GNPA ratio: 2.78% (vs 2.69% YoY)
- Net NPA ratio: 0.45% (vs 0.74% YoY)
- Capital Adequacy Ratio (CAR): 15.42% (vs 15.23% YoY)
The bank also transferred a significant portion of stressed credit card and corporate loan accounts to Asset Reconstruction Companies (ARCs), helping improve asset quality.
RBL Bank’s net worth at the end of the quarter stood at ₹14,957 crore. Additionally, the bank issued 11.3 lakh equity shares under its employee stock option plan, marginally increasing its paid-up capital to ₹609 crore.
