2 May 2017
4QFY17 Results Update | Sector: Financials
RBL Bank
Under Review
BSE SENSEX
29,921
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg. Val, INR m
Free float (%)
Financials & Valuations (INR b)
Y/E March
2017
2018E
NII
12.2
15.8
OP
9.2
12.3
NP
4.5
6.6
NIM (%)
3.0
3.1
EPS (INR)
11.9
17.6
EPS Gr. (%)
32.0
48.4
BV/Sh. (INR)
113.4
127.9
ABV/Sh. (INR)
112.7
127.0
RoE (%)
12.3
14.6
RoA (%)
1.0
1.2
Valuations
P/E(X)
49.2
33.2
P/BV (X)
5.2
4.6
P/ABV (X)
5.2
4.6
Div. Yield (%)
0.3
0.5
S&P CNX
9,314
RBL IN
Strong growth continues; Capital consumption faster than expected
375.2
4QFY17 PAT rose 55% YoY (10% miss). Despite PPoP beat of 8% (+75%/20%
291.5 /3.4
YoY/QoQ), the spike in provisioning led to PAT exceeding estimate. Key
599 / 274
positives: a) Loan growth of 10% QoQ and 39% YoY. b) Fee income growth of
17 /44 /-
1,092
45% YoY and 33% QoQ. c) NIM improvement of 10bp QoQ to 3.5%.
100.0
Absolute GNPAs rose 24% QoQ (+72% YoY) to 1.2% of loans. Led by the RBI’s
CMP: INR585
2019E
21.1
16.8
8.9
3.2
23.8
35.0
147.5
146.2
17.3
1.3
24.6
4.0
4.0
0.6
directive, five accounts slipped into NPA, of which four were closed and
recovered completely in FY17 itself. The remaining one account (EPC sector)
amounted to INR660m (22bp impact on GNPA), 50% of which has been
provided for in Q4. Adjusted for this, GNPAs would have been at 0.98%
(stable YoY).
FY17 highlights:
a) Loan growth was broad-based, with wholesale and non-
wholesale growth of 39% YoY each. b) Strong CASA growth of 68%; CASA
ratio improved 340bp YoY to 22%. c) Fees to assets improved 15bp to 1.45%
d) Decline in C/I ratio by 550bp to 53.5%, despite branch addition of 21%
YoY. e) High share of off-balance sheet growth, leading to a rise in RWA to
TA to 76% v/s 68% a year ago.
Other highlights:
a) PAR >90d in micro-banking stood at 3.9% (largely
covered as 90% of portfolio is via BCs). b) CET 1 ratio fell ~70bp QoQ to
11.4%%.
Valuation and view:
With a diverse product portfolio, no legacy issues, highly
capable management and low market share, RBL should report industry-leading
loan CAGR of ~35% over FY16-19E. We expect stable/improving margins due to a
changing loan mix toward high-yielding loans, a sharp fall in cost of bulk deposits
and improvement in CD ratio. Strong balance sheet growth is expected to drive
operating leverage. We expect RoAs to reach 1.3% by FY19.
Under Review.
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com); +91 22 6129 1526
Subham Banka
(Subham.Banka@MotilalOswal.com); +91 022 6129 1567
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.