RBL Bank Ltd Q3 2024 Earnings Call Transcript

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

Question: Rikin Shah - IIFL Securities - Analyst : Thank you, sir, for the opportunity. I had two questions, first was on the credit card business. So we issued 5.75 lakh new cards in the quarter. Would you be able to give a sense of what would be the breakdown of this between co-branded partnership, internal sourcing, either directly or via the DST? And how do you see this kind of panning out over the medium term? That's question number one. And question number two is on asset quality. Of course, the slippages have inched up. But if you could provide some color as to what's driving the increase in the [visage] between the segments because there have been industry reports that amplify delinquencies have started moving up. So is that more of a precursor to a sustained increase audits kind of a one-off in some of the states?

Question: Rikin Shah - IIFL Securities - Analyst : Thank you, sir.

Question: Jai Mundhra - ICICI Securities - Analyst : Yes, hi. Good evening., Mr. Kumar and team. I have a couple of questions. Sir, first is our yield this quarter n was flat or actually, in few basis points, it declined --

Question: Jai Mundhra - ICICI Securities - Analyst : Sure. Is this any better?

Question: Jai Mundhra - ICICI Securities - Analyst : Sure, yeah. So, sir, first question on the yields there, it looks like that yields have dropped or declined marginally. You mentioned that there are a few MFI disbursements were a little bit weaker or flattish, but it looks like still we have done fairly well in other of the higher-yielding segments, right, which is affordable housing, retail (inaudible) et cetera. So, what could explain the adverse yield movement? Is it competition or is it something else, if you can elaborate a bit?

Question: Jai Mundhra - ICICI Securities - Analyst : Okay. Understood. Then, sir, our ROA improvement trajectory is -- the part is predicated on favorable NIM outcomes, right? So maybe given your stance as interest rate, maybe fourth quarter could be flattish, as you said. But how confident are you on improving NIM for FY25?

Question: Jai Mundhra - ICICI Securities - Analyst : And sir, on your deposit growth, right? So in the framework of FY26 vision, I mean, we have been doing fairly well in almost all of them, but the deposit growth is now 13% odd, which is slightly slower than loan growth. So what are the levers to accelerate the growth from here onwards, considering the competition is going to be -- competition is going to remain competitive? And in that context, do you sense any need to tweak the deposit rates?

Question: Jai Mundhra - ICICI Securities - Analyst : Right, sir. And sir, in that context, how should one look at LDR ratio? I mean, of course, there's been some chatter about keeping the loan to deposit ratio in some prudential limit. We have increased the LDR steadily and right now, we are at around 86%. How should we look at LDR? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 19, 2024 / 12:00PM, RATB.NS - Q3 2024 RBL Bank Ltd Earnings Call

Question: Jai Mundhra - ICICI Securities - Analyst : Understood, sir. Last clarification, this AIF investment, we have done the entire amount that was needed, right? We did not. I mean -- we've taken the entire amount.

Question: Jai Mundhra - ICICI Securities - Analyst : Yes. Very well understood, sir. Thank you, sir.

Question: Kunal Shah - Citigroup - Analyst : Yes. Hi, sir. So again, the question on retail is in particular, they are down like 20 odd basis points. But I think structurally the movement towards the housing loans, now that would pretty much continue away from say, what we have seen with respect to the MFI or even on the business loan side. So then should we see that maybe, overall yield improvement might not be that going forward? Okay, would there be a fair chance maybe apart from because this quarter again, there was decent growth on the commercial banking plus maybe housing, which might continue as such? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 19, 2024 / 12:00PM, RATB.NS - Q3 2024 RBL Bank Ltd Earnings Call

Question: Kunal Shah - Citigroup - Analyst : Okay. And we have not increased any big -- was there risk-weight as there are going to be any parts on any of the unsecured consumer credit or (inaudible)

Question: Kunal Shah - Citigroup - Analyst : Okay. And this housing, if we look at it. Overall disbursements are almost INR1,400 odd crores and portfolio is also up. There is hardly any rundown, which is there. So is there a bought out portfolio or something which is there?

Question: Kunal Shah - Citigroup - Analyst : Sure. And couple of points on asset quality. So one is if I hear you -- and last time we were saying that our credit cost will continue to be high and that might not be the lever on the ROA improvement. But now, maybe, you highlighted that there are efforts being made to just try to contain the credit cost, which then also has the ROEs, as such. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 19, 2024 / 12:00PM, RATB.NS - Q3 2024 RBL Bank Ltd Earnings Call So maybe why the change in stance, what has been done? And second, if you can just provide the breakup of the gross slippages because that has also gone up. So just want to look at it in terms of the incremental delta, INR120 crores, 130 crores, where is it coming from?

Question: Kunal Shah - Citigroup - Analyst : Break up of the gross slippages, [INR666] exactly, if I have to look at it. And delta of INR120 crores, INR130 crores, where is it coming from?

Question: Kunal Shah - Citigroup - Analyst : And incremental, this INR120 crores, INR130 crores, higher delta compared to the last two quarters. This is coming particularly on the card side?

Question: Kunal Shah - Citigroup - Analyst : Got it. And credit card and credit cost, maybe with ROE lever? The change in stance, yeah?

Question: Kunal Shah - Citigroup - Analyst : No, I was just saying that some change in stance in terms of credit cost supporting the ROA. Till last time, we have been highlighting that we might not see too much of Delta coming in credit cost, given the product profile. But I hear you that maybe you said there could be some -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 19, 2024 / 12:00PM, RATB.NS - Q3 2024 RBL Bank Ltd Earnings Call

Question: Kunal Shah - Citigroup - Analyst : Sure. Okay. Thank you and all the best.

Question: Piran Engineer - CLSA - Analyst : Yes, hi. Thanks for taking my question and congrats on the quarter. Most of my questions have been answered. Just a couple of clarifications. Firstly, on the news that RBI gave only one-year extension for your co-branded card with Bajaj. They found some deficiencies. So can you just clarify on what they were and what are the remedial actions you all are taking?

Question: Piran Engineer - CLSA - Analyst : Okay. No, sir, I get that. I appreciate the diversification strategy. I just wanted to understand, is it a smart technological issue? Because unless the RBI does not renew it after one year, I know it's only going to be 40%, but it's still a large number. So just wanted to understand -- I don't want details. I know it's confidential, but can you just give us a sense of how difficult the challenges are to overcome whatever RBI would have told you or to do. Are they mere technical upgrades or is there more to that? That is my only thing.

Question: Piran Engineer - CLSA - Analyst : Okay. And sir, secondly, did I hear it correctly that MFI collections were slightly lower in the elections states?

Question: Piran Engineer - CLSA - Analyst : Understood. Understood. Yes, very helpful.

Question: Anand Dama - Emkay Global - Analyst : Yes, sir. Thank you for the opportunity. Sir, my first question is on the AIF. Basically, if you can explain like what is this investment that we have made? Is this basically investment that we have made over 10 years and how much of that (inaudible) in the last 10 months? You know, RBI today also clearly said that they have been watching the AIF build up over the past 12 months and their main concern was that a lot of some of the lenders basically have sold out their MPS to DTIF and basically indirectly investing into (inaudible) So how much of that could be in our portfolio, if you can talk about that, number one. Number two is that we are talking about that basically when you look at redeeming (inaudible) investments. So what is your view on how much time will it take for reinvest in the investment bank? Will that lead to a complete write-back of all these provisions that the [RBI] in the third quarter. (inaudible) REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 19, 2024 / 12:00PM, RATB.NS - Q3 2024 RBL Bank Ltd Earnings Call

Question: Anand Dama - Emkay Global - Analyst : Sure. So I basically understood it correctly that none of these investments that we have made (inaudible) where basically we have tried to sell off our district assets to the AIF stand, indirectly basically we have invested.

Question: Anand Dama - Emkay Global - Analyst : Sure, sir. That's very helpful. Do we expect any of these reversals happening in next quarter? And basically, if you can quantify -- or maybe, our next one-year asset. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 19, 2024 / 12:00PM, RATB.NS - Q3 2024 RBL Bank Ltd Earnings Call

Question: Anand Dama - Emkay Global - Analyst : So basically, even during the current quarter, we have had some recoveries from return of accounts and that, we tend to show a 24 (inaudible) line time. (inaudible)

Question: Anand Dama - Emkay Global - Analyst : So basically, the quality of return of account. Basically we have taken it out of from this revision line item, whereas, you know, typically, we are seeing that some (inaudible) in the other income. So any change that we want to do, even on that?

Question: Anand Dama - Emkay Global - Analyst : Thank you, sir.

Question: Rakesh Kumar - B&K Securities - Analyst : Yes, hi. Thanks, sir. Can you hear me, sir?

Question: Rakesh Kumar - B&K Securities - Analyst : Yes. So the question was with regards to the sale of credit card portfolio of around INR793 crores, where the loan account number is closer to INR1.5 lakhs, as we have given in our results note. So what was the provision that we were holding? Because I think we have reversed whatever we realized. So if you can, you know, throw some light on that, sir?

Question: Rakesh Kumar - B&K Securities - Analyst : Okay. So -- and sir, the other thing was that, you know, considering this, the total retail loan disbursement that we have seen this quarter. And out of that, the disbursement of the secured retail loan. So is there any -- like this is just a opportunistic move in the business or is there any thought that we have to go more into the secured retail side? So if you can explain, sir.

Question: Rakesh Kumar - B&K Securities - Analyst : Got it, got it. Sir, just coming back to the first question, so the loan that we have -- loan accounts that we have sold, the credit card, this is to some banks, some private bank we have sold. Correct?

Question: Rakesh Kumar - B&K Securities - Analyst : Thank you so much, sir.

Question: Shubhranshu Mishra - PhillipCapital India Pvt Ltd - Analyst : Hi, sir. Good evening. Three questions on the credit card portfolio. First one is when we land a credit card to a Bajaj Finance customer, what is the ownership of that customer? So does it permanently become our customer and Bajaj Finance cannot given any kind of its products, whether it is credit or non-credit? Or is it a transient movement? Bajaj can also land him any credit or non-credit product? We can also land him any credit or non-credit product, but the savings account or life insurance or another personal loan, for example, that is first. Second question is the present set of regulations, say that the originator cannot be the collection agency. So in the brand of Bajaj Finance, is Bajaj Finance or any of its subsidiaries or any of its parent subsidiaries doing the collections for that particular portfolio? That's the second. And the third question is, what is the percentage of less than 25,000 credit limit credit cards in the entire credit card portfolio? Thanks.

Question: Shubhranshu Mishra - PhillipCapital India Pvt Ltd - Analyst : Right. So if I can just squeeze in one last question, who is doing the collections of the Bajaj Finance portfolio right now? What is that entity's name?

Question: Shubhranshu Mishra - PhillipCapital India Pvt Ltd - Analyst : Understood. Thanks. Those are my questions.