RBL Bank Ltd Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Rikin Shah Shah - IIFL Securities - Analyst : Thank you for the opportunity. I have a few questions. So the first one is on card. The credit card acquisition run rate has slowed down by 40% YoY to almost 3.7 lakh now. Despite new additions to the co-branded partnerships, would you believe that this is a new acquisition run rate or can this further accelerate? That's the first one. Second one is on MFI. The top three state exposures for us is materially higher than the peers and the industry. Bihar is one of that. What are the other two states, which constitute among the top 3 and is there any diversification plan there? The third question is, if you could give out some data around the percentage of customers who have more than three to four lenders, that would be helpful. And just a couple of data-keeping questions, but if you could respond to this question, and then I'll just quickly ask some data-related question. Thanks.

Question: Rikin Shah Shah - IIFL Securities - Analyst : Got it. And just a few data keeping questions. On slide number 47, you mentioned SLA 1 and 2 for your MFI portfolio. And even on slide 48 in the bottom chart, there is a SMA-1, 2. So what's the difference in the numbers between those two slides? That's number one. Second, if you could repeat the gross slippage and net slippage for the individual segments, which was laid out in the opening remark, that would be helpful. And lastly, if you could just quantify the stock of total non-NPA related provisions 283 is contingent provision. But in addition to that, any other restructured or standard provisions that we could carry. So stock of that. That's all from my side.

Question: Rikin Shah Shah - IIFL Securities - Analyst : Got it, got it. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 19, 2024 / 9:00AM, RATB.NS - Q2 2025 RBL Bank Ltd Earnings Call

Question: Jai Mundhra - ICICI Securities Ltd. - Analyst : Yes, sir. Sir, I wanted to check on OpEx growth. So some of the questions have already been said. OpEx growth, sir, this quarter staff cost has gone up, but the other OPEx -- the total OpEx is contained because other OpEx has not moved much. And this could be because the business in some of the business uptake was relatively slow. But if you can provide some clarity on the growth in the staff cost and how should one look at?

Question: Jai Mundhra - ICICI Securities Ltd. - Analyst : And sir, secondly, the gross slippages in card at INR630, would this be, let us say, more or less similar as to what the credit cost that we have shown in BFL and others? I mean, one can more or less have the same proportion as what was in the chart in terms of credit costs?

Question: Jai Mundhra - ICICI Securities Ltd. - Analyst : Right. And so, sir, once this transition -- I mean the transition is finally over, right? I mean as of October--

Question: Jai Mundhra - ICICI Securities Ltd. - Analyst : This is over.

Question: Jai Mundhra - ICICI Securities Ltd. - Analyst : We should see the same, let us say, 1.5% to 1.7% or 1.8% that was there in the previous quarters. I mean as per the chart, we should be hitting that in third quarter itself, right? Is that a fair assessment? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 19, 2024 / 9:00AM, RATB.NS - Q2 2025 RBL Bank Ltd Earnings Call

Question: Jai Mundhra - ICICI Securities Ltd. - Analyst : Right. Understood, sir. All the best.

Question: Shubhranshu Mishra - PhillipCapital Pvt. Ltd. - Analyst : Hi, good afternoon, sir. Two questions, the first one is on the credit card. I see a higher for uptick Bajaj Finance card. So just wanted to understand the reason why would that--

Question: Shubhranshu Mishra - PhillipCapital Pvt. Ltd. - Analyst : Can you hear me now?

Question: Shubhranshu Mishra - PhillipCapital Pvt. Ltd. - Analyst : Right. So 2 questions. The first 1 is on the credit cards. When I look at the Bajaj Finance portfolio, it shows a higher uptake. Just wanted to understand the reason of it because it is from deeper geographies or because of overleverage of customers. That's the first question. Second is, when we look at the microfinance portfolio, we mentioned, I think Rajasthan and certain other states where things are improving. So just wanted to check what is the -- what is the collection -- current collection efficiencies in those particular (inaudible) improved?

Question: Shubhranshu Mishra - PhillipCapital Pvt. Ltd. - Analyst : Understood. Sir, if I can just squeeze in one last question, sir, on the microfinance portfolio. Apart from over leverage, what are the other reasons? Because we've been hearing of a large amount of attrition of the collection feet-on-street who do not want to go to the collection center, the lower attendance at collection centers, there's possibly some amount of fraud in the KYC or in the vote identity cards. So I just want to understand various other reasons apart from over leverage, which is the larger narrative in microfinance?

Question: Shubhranshu Mishra - PhillipCapital Pvt. Ltd. - Analyst : Understood. Sir, a fair assumption that the OpEx will remain heightened because of the collection efforts?

Question: Shubhranshu Mishra - PhillipCapital Pvt. Ltd. - Analyst : Best of luck.

Question: Sandeep Joshi - Unifi Capital Pvt Ltd - Analyst : My question is on the credit card book. So on slide 39, we have given a breakup of CIBIL score for Cards-in- Force. The portfolio with less than CIBIL score of 680 is about 11%, and that seems to be causing the maximum pain. Is my understanding correct till here?

Question: Sandeep Joshi - Unifi Capital Pvt Ltd - Analyst : Okay. Understood. So the value outstanding for this portfolio will be similar, largely around 10%, 11%.

Question: Sandeep Joshi - Unifi Capital Pvt Ltd - Analyst : Okay. And any corrective actions you want to take over here, you want to take down this proportion of this lower CIBIL score customers, or we are okay with this?

Question: Sandeep Joshi - Unifi Capital Pvt Ltd - Analyst : Okay. Understood. Understood. So again, on the credit card. So since you are mentioning that the majority of stress in credit cards is largely due to transition. So what proportion of these customers would be honoring their loans with other lenders? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 19, 2024 / 9:00AM, RATB.NS - Q2 2025 RBL Bank Ltd Earnings Call

Question: Sandeep Joshi - Unifi Capital Pvt Ltd - Analyst : Okay. Okay. Understood. Sir, so is it possible to say with a reasonable confidence that at least, let's say, 60% to 70% of these customers would be honoring their loans with other lenders or it's difficult to comment on this?

Question: Sandeep Joshi - Unifi Capital Pvt Ltd - Analyst : Okay. My second question is on the microfinance book. I'm not sure if we have shared the data with respect to unique RBL customers and maybe RBL plus one lender plus two and maybe plus three.

Question: Sandeep Joshi - Unifi Capital Pvt Ltd - Analyst : Understood. And maybe my last question is on the ROA. I heard that you are kind of maintaining your guidance for the next year ROA about, let's say, 1.3% for the financial year '26. But for financial '25, can we guide for any number?

Question: Sandeep Joshi - Unifi Capital Pvt Ltd - Analyst : Yes.

Question: Sandeep Joshi - Unifi Capital Pvt Ltd - Analyst : Yes, for current financial year. Yes.

Question: Sandeep Joshi - Unifi Capital Pvt Ltd - Analyst : Understood. Thank you. I'll come back in the queue.

Question: Deepak Poddar - Sapphire Capital - Analyst : Yes. Am I audible, sir?

Question: Deepak Poddar - Sapphire Capital - Analyst : Yes. Sir, just I wanted to understand now you are sounding now positive that things should improve both on the credit card side as well as on the MFI side, which led to increased provisioning and credit cost in this quarter. So if I have to see at the company level, how do we see credit cost in coming quarters? And overall, for this entire year, what sort of -- I mean, guidance range we can look at in terms of company level credit cost?

Question: Deepak Poddar - Sapphire Capital - Analyst : But is it safe to say that this quarter -- second quarter, the kind of provisioning we have seen, is that the peak or we can see a higher peak, I mean, going forward?

Question: Deepak Poddar - Sapphire Capital - Analyst : Either we can expect a flattish kind of a credit cost going forward of provisioning or maybe a slightly downward trend? I mean that would be a fair thing to assume.

Question: Deepak Poddar - Sapphire Capital - Analyst : Fair enough. I got it. All the very best to you.

Question: Kunal Shah - Citi India - Analyst : Yes. So the first question was last time, I think you indicated that this spillover impact due to collection transition could be like -- it was like last quarter, it was INR60-odd crores, and you said like there would be some spillover, which would come through in next quarter as well. But eventually, when we look at the number on the credit card, it seems to be significantly higher, okay? So was there any other element apart from this collection transitioning or maybe the collection transitioning has given much higher pain than what we anticipated during the last earnings call? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 19, 2024 / 9:00AM, RATB.NS - Q2 2025 RBL Bank Ltd Earnings Call

Question: Kunal Shah - Citi India - Analyst : Yes. And largely, when we look at on a sequential basis compared to like, say, INR400-odd crores last quarter, gross slippage in credit card and INR630-odd crores this quarter. Is it largely the entire incremental delta is due to collection or maybe there is an element of industry-wide pain and some stress which we had seen in your portfolio, increased stress in Q2, in particular?

Question: Kunal Shah - Citi India - Analyst : Okay. And transitioning is now entirely complete. So that's the delta, which was there in this quarter, it should not at all repeat in Q3?

Question: Kunal Shah - Citi India - Analyst : Got it.

Question: Kunal Shah - Citi India - Analyst : And--

Question: Kunal Shah - Citi India - Analyst : Sure. And lastly, in terms of the SMA trend which we look at, okay, so say, SMA 0 being almost more than 3-odd-percent. SMA 1, 2.45 and as you indicated that maybe Bihar largely got impacted, which is your largest state. And it got impacted, particularly maybe in the last week of September. So should we see maybe a relatively higher stress maybe compared to what we saw in Q2. You indicated that at least on credit card, you are comfortable, but on MFI, can it deteriorate further because the number seems to be much higher on the SMA trends and there might be a flow-through plus 25% every quarter provisioning would also continue.

Question: Kunal Shah - Citi India - Analyst : Okay. Okay. And lastly, in terms of the clarification earlier, maybe have you indicated that by FY26, we could even be like 1.4%, 1.5% and now we are getting that down to almost like 1.3-odd percent, though this seems to be more like a transitioning cost? And otherwise, structurally, there doesn't seem to be much impact, or we are actually lowering the guidance for FY26 ROA to 1.3%.

Question: Kunal Shah - Citi India - Analyst : Yes. But here, we are not changing that in the guidance, like it's still like 1.4%, 1.5%, but we are indicating it could be 1.3% FY.

Question: Shailesh Kanani - Centrum Broking Limited - Analyst : My other questions are answered. Just one question from my side. Sir, in wholesale yields, there has been a sequential drop by around 2 bps. And year-on-year as well, it has remained flattish in spite of we be concentrating on corporate and SMEs. So where can we -- when can we see some uptick on the wholesale side in terms of yields?

Question: Shailesh Kanani - Centrum Broking Limited - Analyst : Yes. So the reason I was asking is because our commentary in the past has been that there will be some improvement as we're concentrating at lower ticket sizes. So I was just wondering when we can expect that.

Question: Manish Shukla - Axis Capital Ltd. - Analyst : The contingency provisions that you're carrying, when and under what scenario are you likely to utilize them?

Question: Manish Shukla - Axis Capital Ltd. - Analyst : So the 2.6% to 3% number for full-year credit cost that you suggested, that doesn't assume any utilization from this.

Question: Manish Shukla - Axis Capital Ltd. - Analyst : Okay. Fair. For the second half of this year, how should one think about loan growth and margins, net interest margins and loan growth? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 19, 2024 / 9:00AM, RATB.NS - Q2 2025 RBL Bank Ltd Earnings Call

Question: Manish Shukla - Axis Capital Ltd. - Analyst : Okay. And given the volatility that we've seen in slippages and credit costs, in MFI, any rethink in terms of the extent to which you want to stay -- keep MFI as part of your overall book? I mean not just now over the last 5, 7 years, what your experience has been?

Question: Manish Shukla - Axis Capital Ltd. - Analyst : Got it. Okay. And the last question, slide 35, where you have given collection for early bucket and credit cost. The early bucket collection is not really a good predictor of credit cost--.

Question: Raja Ram - Nuvama Wealth - Analyst : So question is any guidance on the collection, or you can so share any data on the performance of Bajaj and non-Bajaj credit card?

Question: Raja Ram - Nuvama Wealth - Analyst : And any credit cost guidance on the credit card business, sir?

Question: Raja Ram - Nuvama Wealth - Analyst : Okay. Sir, any P&L impact on sell-down of INR250 crores of PL this quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 19, 2024 / 9:00AM, RATB.NS - Q2 2025 RBL Bank Ltd Earnings Call

Question: Raja Ram - Nuvama Wealth - Analyst : Sir, lastly on the dividend payout from the subsidiary company to the parent that I think we have last quarter.?

Question: Anand Dama - Emkay Global Financial Services Ltd. - Analyst : My question is on the staff cost. So this quarter, you said that there were higher payouts. There were I think increased collection cost also, because I think you have had a lot of employees. So how do you break that into kind of have done and how much basically the cost will come down in --

Question: Anand Dama - Emkay Global Financial Services Ltd. - Analyst : And secondly, on the credit card, you said that the slippage obviously will gradually normalize in the credit card too. But what about the collection of the loans, which have actually become delinquent in the second quarter because of the transition?

Question: Anand Dama - Emkay Global Financial Services Ltd. - Analyst : But the accounts, which actually turned delinquent in second quarter, do you expect that to recover by at least fourth quarter? I mean if it is primarily only because of transition.

Question: Ashlesh Sonje - Kotak Securities Ltd. - Analyst : Hi, team, good afternoon, just a couple of questions. Firstly, on the MFI book. How is the trend now in flows from the current bucket to the SME bucket? Has that shown any improvement recently.

Question: Ashlesh Sonje - Kotak Securities Ltd. - Analyst : So if I understand correctly? You expect the month of October to be better than September on collection efficiency, which means that your expectation that 3Q slippages being worse than 2Q is purely because the -- because of flow from the (inaudible).

Question: Ashlesh Sonje - Kotak Securities Ltd. - Analyst : While the flow from current bucket decline? Is that correct?

Question: Ashlesh Sonje - Kotak Securities Ltd. - Analyst : Okay. Perfect. And just a couple of policy related. For your MFI customers who has fallen into NPA, do you have any cooling period or a waiting period for him before he becomes eligible for a loan renewal?

Question: Ashlesh Sonje - Kotak Securities Ltd. - Analyst : So I understand that you do not lend to any customer who has fallen into NPA, but just in case that customer comes back and repays his due to become current again, would then he became eligible for renewal? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 19, 2024 / 9:00AM, RATB.NS - Q2 2025 RBL Bank Ltd Earnings Call

Question: Ashlesh Sonje - Kotak Securities Ltd. - Analyst : (inaudible) portfolio, you have mentioned this early bucket collection. Can you define that term for -- what is the numerator and denominator.

Question: Nitin Aggarwal - Motilal Oswal Securities Ltd. - Analyst : A few questions I have. First, sir, on the deposit growth, we have had a very strong quarter on deposits, even the SAR growth is very strong. So what has really driven this? And how sustainable this growth is?

Question: Nitin Aggarwal - Motilal Oswal Securities Ltd. - Analyst : Okay. And second question I have is on the LCR. Now this quarter, we had such strong deposit growth quality, as you were saying, is also getting better but LCR has dropped sequentially. So what has changed? Any change in the runoff factor that we have incorporated this quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 19, 2024 / 9:00AM, RATB.NS - Q2 2025 RBL Bank Ltd Earnings Call

Question: Nitin Aggarwal - Motilal Oswal Securities Ltd. - Analyst : Okay. Okay. And on the employee side, if I see like this quarter, we have added like more than 1,400-odd employees. This is like 10% of outstanding employees. And last quarter it was fully strong in terms of employee base. So what is the strategy, which business functions are you really hiring for? Because one of the employees in terms of business-like MFI in going slow in disbursements from the first half. So what is the strategy there?

Question: Nitin Aggarwal - Motilal Oswal Securities Ltd. - Analyst : Got it. And just lastly, a data keeping question. Interest reversal number this quarter, if you can share that?

Question: Nitin Aggarwal - Motilal Oswal Securities Ltd. - Analyst : Okay. And next quarter, when you say credit cost will be ballpark similar. So this number will remain broadly--

Question: Anurag Mantry - Oxbow Capital Management - Analyst : Just one clarification regarding the use of contingent provisions potentially. I mean how does that impact maybe your transition that you are looking to do for ECL eventually? I mean if you use the provisions won't that impact the transition there?

Question: Anurag Mantry - Oxbow Capital Management - Analyst : Understood. And just one clarification on your loan growth guidance for this year, I might have missed that.

Question: Anurag Mantry - Oxbow Capital Management - Analyst : Your loan growth guidance for this year. I think I missed that.

Question: Anurag Mantry - Oxbow Capital Management - Analyst : Got it. But given currently of the team and cars and I are having these headwinds, do you still see 18% to 20% possible for this year? Or that's more like FY26.

Question: Rikin Shah Shah - IIFL Securities - Analyst : My questions got answered.