RBL Bank Ltd Q3 2025 Earnings Call Transcript

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

Question: Mona Kettan - Dollar Capital - Analyst : Hi, good evening. (technical difficulty)

Question: Mona Kettan - Dollar Capital - Analyst : Is there any better?

Question: Mona Kettan - Dollar Capital - Analyst : Query on the collection efficiencies with the 98% number that we see for December. Does it include both standard and delinquent book or just the standard portfolio?

Question: Mona Kettan - Dollar Capital - Analyst : Is this the current --. Sorry, this is just the current book.

Question: Mona Kettan - Dollar Capital - Analyst : Got it. And I missed the broad slippage number on the MSR portfolio.

Question: Mona Kettan - Dollar Capital - Analyst : INR536 against last quarter at about 2.4 billion.

Question: Mona Kettan - Dollar Capital - Analyst : Got it. Thanks so much. I'll come back in the queue.

Question: Rikin Shah - IIFL Securities Ltd - Analyst : Thanks for the opportunity. A couple of questions. So while we acknowledge that the collection efficiency has improved sequentially, but it is still only current standard -- current bucket collection efficiency, which usually has to be well north of 99%. So it seems like while the trend is improving, there are still going to be significant forward flows and you already alluded that October, November was weak. But what gives us enough confidence that even when slippages will start trending down? So that's question number one. The second question is on capital. So while the growth rate is still materially higher than the ROEs, we are still consuming capital. Of course, this quarter, there was an impact of higher risk rates. But how long do we expect that the current capital level will sustain our current growth ambitions? And when could we potentially look at the next round of capital raise. That's point two. And third one is more data-keeping question. If you could spell out segment-wise gross slippage and net slippage for wholesale cards, MFI and other details, that will be helpful. Thank you.

Question: Rikin Shah - IIFL Securities Ltd - Analyst : If I can just seek one clarification on this. The tighter ends and guardrails which are going to be implemented from Jan 1 are now pushed out to April 1. So isn't there a possibility that once the tighter guardrails get implemented from April 1, the collection efficiency can, potentially, further deep down given specifically for lower leverage customer profile. So how do we think about that? 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 18, 2025 / 9:00AM, RATB.NS - Q3 2025 RBL Bank Ltd Earnings Call

Question: Rikin Shah - IIFL Securities Ltd - Analyst : Well, I'm sorry to harp on this, but on our current MFI book, what proportion of the borrowers would be four or more in terms of the lender exposure, both in the number of customers as well as the value terms?

Question: Rikin Shah - IIFL Securities Ltd - Analyst : This is on volume or value terms?

Question: Rikin Shah - IIFL Securities Ltd - Analyst : Okay? Got it.

Question: Rikin Shah - IIFL Securities Ltd - Analyst : Got it. And sir, just one more question if I may squeeze in. With the higher additional provision on JLG now, I understand the portfolio 85% provision coverage. Going ahead, what kind of provisioning policy will we be following for JLG book? Earlier we believe it used to be 25% on 90 DPD. Is there a fundamental change in the provisioning policy?

Question: Rikin Shah - IIFL Securities Ltd - Analyst : Got it. Thank you very much for answering all my questions.

Question: Piran Engineer - CLSA - Analyst : Yeah. Hi, sir. Good afternoon. Just, firstly, continuing on cards. Last quarter, slippages of INR600 crore, this time INR570 crore. What's really the view here because last time it was impacted because of the migration and collection responsibilities. And we were of the view that in the next couple of quarters, we would go back to that 5%, 6% credit cost. So any outlook on credit cards would be useful.

Question: Piran Engineer - CLSA - Analyst : Got it. Okay. That's it. Secondly, just on Rikin's question, have you all started adopting the norms that come from April 1 already, like, proactively or did I misunderstand that?

Question: Piran Engineer - CLSA - Analyst : Okay. And just as per your assessment in the industry, has everyone started adopting this one plus two non or are you one of the few people who are proactively doing it?

Question: Piran Engineer - CLSA - Analyst : Understood. Okay. And just lastly on MFI, sir, if you could just clarify if December has been better than October, November, and Jan is also a good trend. Why are we saying that slippages will remain elevated in four Q as much as three Q?

Question: Piran Engineer - CLSA - Analyst : But it's fair to say that -- yes, sorry. Please go ahead.

Question: Piran Engineer - CLSA - Analyst : Correct. So basically, then at least in four Q, the slippage into SME 0 and SME 1 swill be lower than three Q. Is my understanding correct?

Question: Piran Engineer - CLSA - Analyst : Okay. So it's just seasoning that a stage two loan moves into stage three and that's what will happen. Got it, Okay. That's it from my end. Thank you and wish you all the best. 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 18, 2025 / 9:00AM, RATB.NS - Q3 2025 RBL Bank Ltd Earnings Call

Question: Kunal Shah - Citigroup Inc - Analyst : Yeah, thanks. For the question, firstly on LCR, so quite a sharp improvement out there. So maybe anything done with respect to the quality, no doubt you indicated in terms of the granular deposit growth. But besides that, in terms of the outflow rates and all, how are we seeing it and what is clearly led to this improvement?

Question: Kunal Shah - Citigroup Inc - Analyst : Okay. And secondly, in terms of margins. So again, I think on MFI and looking at the overall operating environment, the growth could be lower. Credit card, also, it will take some time before we see the entire transition towards the newer partners. So then maybe, obviously, there has been some element of interest reversals, but definitely, should we look at the overall margins being down even from the current level because of the pressure on yields and some cost of funds also staying elevated.

Question: Kunal Shah - Citigroup Inc - Analyst : Okay. Got it. Yeah, thank you.

Question: Anand Dama - Emkay Global Financial Services Ltd - Analyst : Yeah, so thank you for your question. Sir, you said that credit card is also allowing for (inaudible) whereas the microfinance might remain (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 18, 2025 / 9:00AM, RATB.NS - Q3 2025 RBL Bank Ltd Earnings Call So in fourth quarter, if we continue to make this kind of provision with no one of gains, can we expect that we might run into a net loss in fourth quarter? And from first quarter onwards, I think we are entering into a far better zone where we are largely done with the heavy lifting in terms of provision and micro financial credit card. (technical difficulty) Is that the right thing to (technical difficulty)

Question: Anand Dama - Emkay Global Financial Services Ltd - Analyst : In the talked about cost control, of car and credit cost, so I think the other factor certainly will take time. But on cost front, what exactly are you planning to do in FY26 to control it of (technical difficulty)

Question: Anand Dama - Emkay Global Financial Services Ltd - Analyst : Any number do you have in terms of cost, income ratio or cost to asset ratio.

Question: Anand Dama - Emkay Global Financial Services Ltd - Analyst : We are actually talking about next two, three years. So can we get to that less than or close to 55% zone? 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 18, 2025 / 9:00AM, RATB.NS - Q3 2025 RBL Bank Ltd Earnings Call

Question: Anand Dama - Emkay Global Financial Services Ltd - Analyst : Sure, thanks. Thank you.

Question: Lavish Korval - Axis Bank - Analyst : Yeah, just one question. If we come to slide number 26, it shows credit cards have fallen down. There are INR2.6 lakh credit cards that have been issued during the quarter. However, the number of cards and food have decreased. So what is the reason for that?

Question: Lavish Korval - Axis Bank - Analyst : Okay.

Question: Jai Mundhra - ICICI Securities Ltd - Analyst : Yeah. Hi, good afternoon, sir. Thanks for the opportunity and thanks for the clarification. I wanted to check on one, thing of over 10 million plus JLG customer, there would be a certain amount of non-MFI retail loans as well, right? If you can ballpark, do we offer non-JLG, non-MFI loans to these customers or we don't? Industry data suggests that there is some INR1.5 lakh crore of non-MFI retail loans available to JLG customer. What is our practice? And what could be that quantum, ballpark?

Question: Jai Mundhra - ICICI Securities Ltd - Analyst : Okay. So we don't offer any two wheelers or affordable housing or gold loan, et cetera to these customers as of now.

Question: Jai Mundhra - ICICI Securities Ltd - Analyst : Sure. Thank you. Secondly, sir, now you mentioned in your opening remarks that you know the growth will be driven by wholesale and secured products and the unsecured proportion may come down. But still, if you want to highlight the business growth overall, at overall basis for the next maybe two, three quarters until the time we are out of this asset quality headwinds. If you have any comment there.

Question: Jai Mundhra - ICICI Securities Ltd - Analyst : And lastly, a small clarification. I think you mentioned 10% to 11% is the borrower who are four lenders plus. Did I hear this correct? And if you have the number, same number for, maybe two or three lenders, I mean, because just to get a delta, if the infant guardrails are going to get implemented.

Question: Jai Mundhra - ICICI Securities Ltd - Analyst : So three plus is roughly 85%, up to three is 85%?

Question: Jai Mundhra - ICICI Securities Ltd - Analyst : Right. And, sir, if I may just ask a small clarification again. Apart from three-lender cap, all other guardrails, right, the INR2 lakh you already mentioned, but this disbursement, lenders head stop disbursement, anyone who was beyond a certain DPD, maybe 60 DPD customers, that you have already implemented, right? 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 18, 2025 / 9:00AM, RATB.NS - Q3 2025 RBL Bank Ltd Earnings Call

Question: Jai Mundhra - ICICI Securities Ltd - Analyst : Just a small thing, sir. I mean, how frequently does the data gets refreshed at the bureau level for MFI? And maybe because, I think there was a proposal where the bureau were asked to refresh the data or update the data more frequently, this is like real-time basis or how frequently does it get refreshed?

Question: Jai Mundhra - ICICI Securities Ltd - Analyst : Okay. So this is MFI plus other retail also. This is only applicable to MFI?

Question: Jai Mundhra - ICICI Securities Ltd - Analyst : Okay, great, sir. Thank you and all the very good.

Question: Darshil Jhaveri - Crown Capital - Analyst : Hello, good evening, sir. Thank you so much for taking questions. So I just wanted to know could we give any kind of guidance, how we are looking to FY26 in terms of the loan growth or credit cost or far away, any of these factors that we want to look forward for FY26. 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 18, 2025 / 9:00AM, RATB.NS - Q3 2025 RBL Bank Ltd Earnings Call

Question: Darshil Jhaveri - Crown Capital - Analyst : Or answer any -- how do we see Q4 going? Like, I think, we had some kind of NIM pressure will be there. So what do we look at like, how do we look, you know how the end?

Question: Darshil Jhaveri - Crown Capital - Analyst : Oh okay. Got it, sir. And next question regarding, I think, you said around like 20% of the book is like three lenders plus. So with the new ones coming, how would the industry work? Like, so we'll not be able to lend to these people or you know, so is it like a 20% of book will not be viable for us? So how would that impact the book and growth in that sector, sir? Unidentified Company Representative 1 I think the problem that we are seeing right now is because of overleveraging. And in any case, we would not want to lend to these customers who already have two loans, three plus. So basically, while this versal might have looked simpler if we did not put this, but we will again face a similar kind of a problem in the future.

Question: Darshil Jhaveri - Crown Capital - Analyst : Correct, sir. How we grow that a lot of people and it's an industry-wide phenomenon where a lot of people are over leverage. So I just wanted to know about that. 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 18, 2025 / 9:00AM, RATB.NS - Q3 2025 RBL Bank Ltd Earnings Call

Question: Darshil Jhaveri - Crown Capital - Analyst : Oh, okay, great. That's great to know, sir. And the last question, what is the price we expect for FY25?

Question: Darshil Jhaveri - Crown Capital - Analyst : Credit cost for FY25, sir.

Question: Darshil Jhaveri - Crown Capital - Analyst : Oh, okay, sir. That's it from my side. All the best. Thank you.

Question: Suraj Das - Sundaram Mutual Fund - Analyst : Yeah, hi, sir. Thanks for the opportunity. I have three questions. The first one is a clarification. When you say that in the MFI, the provisioning policy is 25% every quarter. Is this some one DPI or is this some 90 DPI?

Question: Suraj Das - Sundaram Mutual Fund - Analyst : Understood. So the second question is, sir, on the collection, if you can see the improvement that you have seen in December, if you can give some geographic color in terms of where -- I mean, is this improvement across broad-based in all the states or how has been the situation across states? And also, if you can just talk about a bit more about Bihar and Rajasthan, which should be you are the top couple of states.

Question: Suraj Das - Sundaram Mutual Fund - Analyst : And the last one is on SME book INR550 crore. What is the outstanding provision this book that you have as of today?

Question: Suraj Das - Sundaram Mutual Fund - Analyst : Okay, sir, I understood. Thank you so much, sir.

Question: Rohan Mandora - Equirius Securities - Analyst : Good afternoon. Thanks for the opportunity. In the MFI, the 43% disbursals are getting covered under KGFMU. So what is the thought process on which you choose a cover? Why not 100% for incremental disbursement?

Question: Rohan Mandora - Equirius Securities - Analyst : Sure. Okay. Second was on the non-MFI non-cards book. Is it possible to give a sense on what kind of people would that be contributing in three Q? Just to get a sense that incrementally, how is that book contributing on profitability.

Question: Rohan Mandora - Equirius Securities - Analyst : Either way it's fine, just want to get a lot of excluding these two segments. How is the growth on profitability shaping up? 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 18, 2025 / 9:00AM, RATB.NS - Q3 2025 RBL Bank Ltd Earnings Call

Question: Rohan Mandora - Equirius Securities - Analyst : Wholesale is about 3.5%? Okay. And so on large corporate fees and strategy we have indicated will not grow that meaningfully because of the lower yield. But this quarter, we have shown a focus on sequential growth. So just want to understand the thought process here.

Question: Rohan Mandora - Equirius Securities - Analyst : Right. And sir, next on this deposit piece. So if you look at the savings deposit, I think there's a 12% growth in the last six months. So just want to know if there is any lumpiness or it's all granular deposits. And we are not going term deposit this quarter. So despite we having a relatively higher rate, so what was the reason here? And associated question here, was the cost of fund despite SAR mix has gone up. So what is the average cost of SAR during three Q and two Q?

Question: Rohan Mandora - Equirius Securities - Analyst : And lastly, I just want to reconfirm. Average cost of --

Question: Rohan Mandora - Equirius Securities - Analyst : 6.4%? Okay. And just lastly on this this slippage in the cards, for the transaction link part was nothing in three Q, right? It is all business as usual. All the transition link slippages that is not there in the three Q slippages. most of the credit card in secure business as usual due to the economic environment, macroeconomic environment.

Question: Rohan Mandora - Equirius Securities - Analyst : Sure. Thanks, sir.

Question: Aditi Nawal - RSPN Ventures - Analyst : Yeah, hi. Thanks for taking my question. So I had a few questions with respect to the CC book. So one is in the last quarter you provided a split of what is the credit cost for the credit card book. So I just wanted to know what is the credit cost for this quarter, and also the split between the existing BSL cards and the non-BSL portfolio in terms of credit cost.

Question: Mona Kettan - Dollar Capital - Analyst : And what is the direct sourcing number?

Question: Mona Kettan - Dollar Capital - Analyst : Okay, got it. And just the credit cost for the credit card book overall.

Question: Mona Kettan - Dollar Capital - Analyst : Okay. So, okay, in the credit cost for the credit card book you also include the PL or two credit card customers due to my calculation.

Question: Mona Kettan - Dollar Capital - Analyst : Got it. Glad to meet your mind. Thank you so much.

Question: Kunal Shah - Citigroup Inc - Analyst : Yeah, thanks for taking the question again. Just was broadly trying to understand in terms of the MFI provisioning. So now INR922 crore of slippages and almost INR540-odd crore of SME bucket. So if we look at it closer to INR1,470-odd crore of this stress pool on which we are already carrying almost like INR790 crore of provisioning. Okay. So I would say still even if I include SME, then it still seems to be like INR53-odd crore in coverage from INR85 crore on the GMPA. So just to inform maybe like incremental provisioning which was done of INR414-odd crore, maybe that should probably be absent in the -- if you look at it not too much of flows and the normal slippages, we are also indicating that least Q4 slippages will be similar to that of Q3, at least not going up. 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 18, 2025 / 9:00AM, RATB.NS - Q3 2025 RBL Bank Ltd Earnings Call But the entire INR414 crore accelerated, that might not be required and still we have 1% contingency buffer as well. So fair to assume that only provisioning it could be like at least INR400-odd crore kind of delta in the next quarter or how should we look at it?

Question: Kunal Shah - Citigroup Inc - Analyst : Okay. And contingency when we look at it, if I have to look at that will only be like INR65-odd balance is still towards credit card and CL. And because generally we tend to maintain 1% contingency on the unsecured. So you are saying that it's like INR290-odd crore of contingency, but that can be utilized for MFI could only be INR65-odd crore. Unidentified Company Representative 2 If we have to go back to the audit on this, to clarify, in our cards business, we provide fully at 120. So there is no real baggage we carry which requires contingency per se because whatever deficiency 90 is fully provided by 120. Unlike in microfinance, they provide 25% each quarter. So yeah, you're right to say that we have the intent of doing both on cards and MFI, but given how our provision policy is in cards, the pay is absorbed very quickly in cards on the entirely BAU basis. So micro finance will have a discussion, and we will see, but given that you've taken it up to 85% with the intent of absorbing as much as we can, that will continue to be the intent in Q4 as well.

Question: Kunal Shah - Citigroup Inc - Analyst : Okay. So then we might not continue with 1% on credit card plus PL. Okay. Got it. Thank you. 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 18, 2025 / 9:00AM, RATB.NS - Q3 2025 RBL Bank Ltd Earnings Call

Question: Sailesh Kanani - Centrum Broking Ltd. - Analyst : Thanks for the opportunity, sir. So my other questions are answered. Just one question on the MFI side. You said certain states are still under performing in terms of collection efficiency compared to November and October. So can you highlight a couple of states? Are we just are still seeing some issues in terms of collection efficiency? Unidentified Company Representative 1 So the southern states, Sailesh. Just the two southern states are slightly lower than the previous month.

Question: Sailesh Kanani - Centrum Broking Ltd. - Analyst : Karnataka and Tamil Nadu. Unidentified Company Representative 1 Yeah. AP, Telangana, of course, is very early days for us so we have 100% in the last four, five months.

Question: Sailesh Kanani - Centrum Broking Ltd. - Analyst : Okay. That's all, that's all for my side. Thanks. 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 18, 2025 / 9:00AM, RATB.NS - Q3 2025 RBL Bank Ltd Earnings Call

Question: Shubhranshu Mishra - PhillipCapital (India) Pvt Ltd - Analyst : Hi, thanks for the opportunity. Just one question. When we look at the credit card fee, how many of the credit card customers have two plus credit cards? How many of them have three plus? How many of them have four plus, and how many of them have five plus? And what is the unique number of credit card customers?

Question: Shubhranshu Mishra - PhillipCapital (India) Pvt Ltd - Analyst : Like how many cards? Two, three, four, five. How many cards?

Question: Shubhranshu Mishra - PhillipCapital (India) Pvt Ltd - Analyst : And okay, great, thanks and I'll come back. 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 18, 2025 / 9:00AM, RATB.NS - Q3 2025 RBL Bank Ltd Earnings Call

Question: Prakhar Agarwal - Elara Capital (India) Pvt Ltd - Analyst : Hi, sir. Thank you. Just one question from my side. In terms of when you say that you'll probably start FY26 on a relatively cleaner base. Is there a thought process that you probably will carry on a steady-state basis, some contingencies on MFI, say something like PAR 30, you'll probably carry or maybe some contingency that you carry on MFI on a steady-state basis. Or probably going to FY26 wherein you probably have utilized a certain set of contingents wherein you have participants. And then again, we are thinking about how FY26, in terms of how to play out.

Question: Aditya Bagdia - Buoyant Capital - Analyst : Yeah, hi. Thanks for the opportunity. If you can give any color on the recovery efforts and increase collection staff being deployed for the MFI pool. Also, if you can share any highlights on the sourcing in RBL versus other [disease], any sense on which portfolio is seeing higher stress in proportion. Unidentified Company Representative 1 So as far as collection efficiencies are concerned, what we've done is over the last two quarters, we've reduced the ACR, and in the number of accounts per loan officer for collection. We've almost now brought it down to about a range of 400 to 420 which was somewhere around 550 plus as far as a ACR is concerned. So that, obviously, is helping in the SME bucket and the zero bucket. And for the recovery buckets, so basically, 90 plus and the written-off pool, we have put in a separate set of people for recovery. This has been in effect for the last two months now and we've already started to see some green shoots and better recovery numbers in the month of December itself. So roughly about 1,100 to 1,200 people have been deployed only for 90 plus anti [W&I] pool. And I think in this coming quarter also, we will see an uptake in this number. As far as sourcing between RFL and the rest of the DCs is concerned, basically, the ruling is the same. We are flattish over the last two months. In any case, the RFL book is 90% of the portfolio. So that's not much of a difference between the quality of sourcing, et cetera because ruling remains the same for all PCs.