RBL Bank Ltd Q4 2025 Earnings Call Transcript

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

Question: Jai Mundhra - ICICI Securities - Analyst : I have first, a few, just to get the doubts clear. I just wanted to check that you mentioned that we have utilized the contingent provisions that we were carrying against earlier in card, as well as in the book, that is right? I mean, so now, we are left with the -- yeah, sure. And secondly, you said that the savings rate cut effective May 1, that would bring down your savings rate -- blended saving rate from around 6.4% to 5.6%.

Question: Jai Mundhra - ICICI Securities - Analyst : Sure. Now, for coming to the questions. On this -- so now, we have continue -- I mean we have taken a call to consume the continuing provision. Does this signify that we are now looking at near normalized stress level formation in both JLG and credit card portfolio?

Question: Jai Mundhra - ICICI Securities - Analyst : Sure, sir. And did I hear it right that you mentioned that the loan growth and loan growth could be around 16% to 17% at the blended level and the CET1 would still be above 13%, was that the commentary, right, that I understood?

Question: Jai Mundhra - ICICI Securities - Analyst : Okay. So -- and lastly, sir -- lastly, the -- we have seen this quarter, there's a very strong growth in the payment fee, I mean, within fee payment fee has grown reasonably well, while there is a bit of a slowdown in the credit card portfolio as well as acquisition. So was there any one off or this is seasonality or even on Y-o-Y basis the number looks very strong, if there is any explanation there or this is something else.

Question: Jai Mundhra - ICICI Securities - Analyst : Right. And lastly, sir, how do you look at the OpEx growth for next FY26? We have managed it very well and of course, a lot of would have -- you have -- you would have concluded some of that investments also. Now, how should one look at the overall OpEx for FY26? Thank you.

Question: Piran Engineer - CLSA - Analyst : Just following up on the previous question, what are we -- what is our expectation on growth in unsecured PL and credit cards? So microfinance, you said that disbursement normalization will happen in the third quarter, but what about the other unsecured businesses?

Question: Piran Engineer - CLSA - Analyst : Got it. And also, when you mentioned in unsecured PL and credit cards, we are trending towards normalized levels, and after that, I think you mentioned something, normalization in 1Q, 2Q. Did I hear that correctly?

Question: Piran Engineer - CLSA - Analyst : (multiple speakers)

Question: Piran Engineer - CLSA - Analyst : Okay, fair. And then secondly, in terms of you highlighted how much you've cut the savings deposit rate, but what for term deposits, especially on the retail side?

Question: Piran Engineer - CLSA - Analyst : 25s across all 10 years?

Question: Piran Engineer - CLSA - Analyst : Okay, but the non-peak retail TD rates would be flat, or have you all cut it across other buckets?

Question: Piran Engineer - CLSA - Analyst : Okay, so majority of them would get repriced 25 bps incrementally. I mean, for the fresh flows?

Question: Anand Swaminathan - Bank of America - Analyst : I just want to understand the CGFMU mix you mentioned. If you can give some idea about how the ROI economics will work under the CGFMU, just basically, what will be your net margins and net credit costs and the overall ROI compared to what the book makes in a normalized environment. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 12:00PM, RATB.NS - Q4 2025 RBL Bank Ltd Earnings Call

Question: Anand Swaminathan - Bank of America - Analyst : Sorry, 15% of what? Unidentified Company Representative 15% of crystallized portfolio for every year.

Question: Anand Swaminathan - Bank of America - Analyst : So let's say for example, so this cycle, the microfinance loss rate was 70%, let's say. If a similar cycle plays out, let's say three, four years down the line, what will be your net loss and after you have that CGFMU cover to that? Unidentified Company Representative Yeah, it will be, say if it is a 68% average on a portfolio which we have secured, what we get is 15% support, let's assume INR100 crores what told 8% is the NPA. I can climb up to entire 8%. It can come because only the first 3% of the 8% is INR8 crores. That is 24 lakhs. That is the minus remaining 7 points provided all the claims get accepted, even if I take some there may be some claim rejections, still we can get bare minimum. (inaudible)

Question: Anand Swaminathan - Bank of America - Analyst : Okay. Then what should be the through cycle, I understand the delay in timing, but what should be the true cycle credit cost if, let's say 100% of your book, it's under the CGFMU going forward. Unidentified Company Representative That will take some time for us to go because right now, out of 6,000 or 5,000..

Question: Anand Swaminathan - Bank of America - Analyst : So then your ROA improves significantly. You just take 1% cost and your through cycle credit cost was like let's say 4%, and you see a significant improvement in profitability or I'm missing something here?

Question: Anand Swaminathan - Bank of America - Analyst : Okay, so then why not just go and grow it aggressively? Why are you saying, we want to keep it under a thing like it seems a very good deal. Why not go back to previous growth levels? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 12:00PM, RATB.NS - Q4 2025 RBL Bank Ltd Earnings Call

Question: Anand Swaminathan - Bank of America - Analyst : Okay, makes sense. So then, basically your loss rates come down by 30%. That's what, if I run a loss. Unidentified Company Representative Rate of 8%, the first 2 -- 2% will be born by us, and we are paying 1% premium for the balance.

Question: Kunal Shah - Citigroup - Analyst : So firstly, just wanted to understand on the provisioning part. So this INR815 odd crores that is after the 1% contingency provisioning release of, I would believe, INR250 odd crores. So would that be right?

Question: Kunal Shah - Citigroup - Analyst : INR273 crores exactly. Yeah. So when we look at it all put together, you mentioned like INR375 crores was the cards. Okay. Then we have created another INR248 crores of the additional provisioning to make like 100% provisioning on the GNPAs. And obviously, like INR283 crores which out of it like INR273 crores was the contingency. So when I have to look at it like in INR815 crores, there was INR375 crores of card then almost INR248 crores of additional provisioning then crores towards the SMA provisioning net of the utilization and balance would have been towards the MFI and the other secured portfolio.

Question: Kunal Shah - Citigroup - Analyst : Yeah, that I agree. So if I have to look at it, 815, okay, plus almost 273, which is the total contingency which has got utilized. Okay, so when we look at it so all put together, would have been almost INR1,100 crores, okay. And so, now, maybe just running Through the mats of this INR1,100 crores, credit card would be 375. I agree that was released, but otherwise, credit card in this gross number should have been 375. Okay. Then there was additional provisioning of INR248 crores which was done to make the, maybe the provisioning 100% on JLG book. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 12:00PM, RATB.NS - Q4 2025 RBL Bank Ltd Earnings Call Okay, and then INR283 odd crores was the SMM book and then balance would be, I would say the other normalized GLG and retail. Retail, you said it's almost zero, so then balance would have been towards the regular GLG provisioning.

Question: Kunal Shah - Citigroup - Analyst : Okay, yeah.

Question: Kunal Shah - Citigroup - Analyst : 375 you mentioned.

Question: Kunal Shah - Citigroup - Analyst : Got it. And now, going forward, if we have to look at it credit cost, how should it settle because now on SMA, we have largely provided 75%, GNP, 100% is provided. So then, would there be any number which we're really looking as a maybe a normalized provisioning on the MFI portfolio and credit card also, it's coming off. So now, how should we look at the maybe the credit cost in JLG in credit card and the other part of the portfolio. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 12:00PM, RATB.NS - Q4 2025 RBL Bank Ltd Earnings Call

Question: Kunal Shah - Citigroup - Analyst : Yeah, so that's what. So maybe non-JLG, non-cards, not much JLG largely provided on incremental 25% and credit card incremental net slippage, almost 95% provision. So that's the fair assumption of the credit cost.

Question: Kunal Shah - Citigroup - Analyst : Okay, got it. Perfect. And when we look at it, so what was the gross slippage in credit card and MFI this quarter?

Question: Kunal Shah - Citigroup - Analyst : Okay. Yeah. And one last question in terms of the growth, so JLG, you mentioned would still be in the range of 6% to 7% of the advances. Did I hear that correctly?

Question: Kunal Shah - Citigroup - Analyst : So when we look at it currently being at 6.2%, so now, fair to say that JLG will also be growing in line with the overall loan growth which we have indicated of 16% to 17% or even higher than that, just to be within that range. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 12:00PM, RATB.NS - Q4 2025 RBL Bank Ltd Earnings Call

Question: Kunal Shah - Citigroup - Analyst : Any initial comments on the guardrail implementation? What are you seeing on the ground? Is there any impact, delays, deferments which are happening because of the shift moving from 3 lender, maybe more lenders to this than 3 lenders?

Question: Kunal Shah - Citigroup - Analyst : I was asking maybe any -- maybe deterioration in collection efficiency which we are seeing because of this guardrail implementation in the initial month in the maybe since it's implemented from April 1. So in these three weeks, any kind of deterioration we had seen?

Question: Rohan Mandora - Equirius Securities - Analyst : So this is on cards, as for the slide, the revolve rate has gone up to around 25% versus 23% in earlier quarter. So just want to check if there's any trend change here or it's just a one-off thing.

Question: Rohan Mandora - Equirius Securities - Analyst : Sure, sir. Second one, sir, on the home loan vehicle finance disbursement in 4Q, compared to 3, they were lower, and even if you look at the quarterly average for the nine months it's lower. So is it due to some specific strategy or is it competitive behavior or lack of demand? How should I agree to it because I think for other lenders has been pretty good.

Question: Rohan Mandora - Equirius Securities - Analyst : Sure. And for on the business loans, we have seen a healthy growth in that during the year. So one is, how's the origination mix in that right now? Is it primary branch driven? And also, if you can touch on 30 days, 90 days levels in that right now?

Question: Rohan Mandora - Equirius Securities - Analyst : So lastly, on your OpEx guidance of 10% year on year growth for '26, we currently still, if you look at in many businesses, co-branding or maybe a non-branch led sourcing, would still be a meaningful part. So with business growth leads costs will grow. So where are we trying to curtail cost incrementally to be able to contain OpEx to 10%. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 12:00PM, RATB.NS - Q4 2025 RBL Bank Ltd Earnings Call

Question: Sailesh Kanani - Centrum Broking - Analyst : A couple of data keeping questions. On the wholesale book front. If you can give the rating breakup, a better triple B&B, BB and below.

Question: Sailesh Kanani - Centrum Broking - Analyst : Okay. Second question on the contribution with respect to OpEx, we earlier have been alluded that eluding that a business equation cost will kind of come down as we kind of increase the productivity on the branch plan. I understand that also includes the collection in the line item disclosure, but have you seen any material change in business mission cost? Any decline we have seen in the recent times?

Question: Sailesh Kanani - Centrum Broking - Analyst : Just to continue on that, but we would have some return of pool where we would continue to do our efforts for collection, right? Because we've been exclusively writing off, so, how would that work then in that case?

Question: Sailesh Kanani - Centrum Broking - Analyst : Okay. And last question from my side, in the opening remarks, you have said that we are PSL compliant, but we have not bought any PSL certificates, right? So it is organic compliance, right?

Question: Param Subramanian - Investec - Analyst : Firstly, on the draft LCR guidelines that have come through, have we done any initial assessment on that, the impact for us?

Question: Param Subramanian - Investec - Analyst : How much would that be?

Question: Param Subramanian - Investec - Analyst : Okay, got that. Also on capital, so you made that initial comment that even by the end of FY26, we should be north of 13% CET1. But structurally, how are we looking about say capital for the company where we comfortable operating?

Question: Param Subramanian - Investec - Analyst : Okay, fair. Just one last question. So in the PNL going into next year, there are a lot of moving parts with the rate cut, you said there is a EBL repricing pressure, there are the rate cuts, there is some operating leverage. So some substance, I just want to understand how one should be thinking about operating profit, right, going into next year and maybe beyond since credit cost has been discussed in detail, but maybe an operating profit.

Question: Param Subramanian - Investec - Analyst : You're talking about the absolute number, right?

Question: Krishnan ASV - HDFC Securities - Analyst : So I have two questions. One on the JLG portfolio with the new guard. Could you just through..

Question: Krishnan ASV - HDFC Securities - Analyst : Is this better?

Question: Krishnan ASV - HDFC Securities - Analyst : Okay, thank you. So my first question was about these new guardrails and just the bank's approach to these new guardrails, how does your customer selection change on the ground now when there are -- when you face up with borrowers who have more than the lenders. Could you just talk us through that a little bit? Number one. Number two, from the cards portfolio, right -- on the cards portfolio, there is a certain potential profitability that you would assess for the cards business as we stand today, right? That would be the potential and where we are, you are aware of and at the end of FY25, how long would you think it would take us to get to potential profitability on the cards?

Question: Krishnan ASV - HDFC Securities - Analyst : What I mean is if you now encounter a customer who is supposing with 4 lenders, right? How do you decide whether you need to withdraw from this customer? I mean what are you looking at that borrower level?

Question: Krishnan ASV - HDFC Securities - Analyst : Ongoing monitoring is what I'm asking.

Question: Krishnan ASV - HDFC Securities - Analyst : Yeah, I mean you either become a lender who then withdraws from that borrower so that the borrower goes back to 3 lenders, or you remain one of the three and somebody else has to withdraw. So I'm saying how do you take that decision? Is all that I'm trying to..

Question: Krishnan ASV - HDFC Securities - Analyst : Understood. I think probably I didn't explain my question too well, but it's okay. We can take this offline. Thank you. Yeah, the other one on cards, how far are we from potential peak profitability?

Question: Krishnan ASV - HDFC Securities - Analyst : Okay, so just related to this, if you don't mind it. I mean, I understand this obviously, you're trying to now make sure that you are able to sweat these customers through other other segments as well, through other products as well. So just on that journey, could you just talk us through where we are in terms of what percentage of our customers are relatively more mature in that journey, in terms of more products per customer on the asset side?

Question: Anand Dama - Emkay Global - Analyst : So number one is that you've been saying that microfinance is where there will be a contraction, or basically the pick-up will take some time. Card is where I think you are expecting a normalization to happen. But if the future forward ourselves into the next two to three years, what will be the share of microfinance and cards as a percentage of our overall portfolio.

Question: Anand Dama - Emkay Global - Analyst : Yeah, exactly, I expect that to be lower, but what could be that like could it be around 10% or 10% to 15% in next two to three years? Is that a fair assumption?

Question: Anand Dama - Emkay Global - Analyst : And any guidance in terms of margins, how it will shape up over next first half and then second half and so will be the ROS? You may not give the hard numbers, but it is direction.

Question: Anand Dama - Emkay Global - Analyst : Okay, so directly for next year, I mean FY26, we should be better off versus FY25, right, because you've done the heavy lifting quality.

Question: Aditi Nawal - RSPN Ventures - Analyst : Yeah, hi. Am I audible? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 12:00PM, RATB.NS - Q4 2025 RBL Bank Ltd Earnings Call

Question: Aditi Nawal - RSPN Ventures - Analyst : Yeah, hello.

Question: Aditi Nawal - RSPN Ventures - Analyst : So most of my questions are answered. I just had one question on the Karnataka exposure. So first, can you just give a number on what is our shared in Karnataka and also how do we plan to, like, what is the status right now and how do we plan to, like, what is the strategy going forward, especially in the Karnataka area?

Question: Maitri Shah - Sapphire Capital - Analyst : Hello?

Question: Maitri Shah - Sapphire Capital - Analyst : Yeah, I just had two questions. Previously in the opening comments, you stated that our secured retail book will grow by like 25% to 30%. Is that correct? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 12:00PM, RATB.NS - Q4 2025 RBL Bank Ltd Earnings Call

Question: Maitri Shah - Sapphire Capital - Analyst : And the wholesale book will grow from 10% to 12%, right?

Question: Maitri Shah - Sapphire Capital - Analyst : And our lended loan book will have like a 16% to 17% growth?

Question: Maitri Shah - Sapphire Capital - Analyst : So how do we see our ROAs after all these initiatives and provisioning? And with a flattish PPOP, how do we see ROA shaping up for FY26?

Question: Maitri Shah - Sapphire Capital - Analyst : And advances growth, how do you see the advances going?

Question: Maitri Shah - Sapphire Capital - Analyst : And the names, is there a guidance on the names I can get?

Question: Hitaindra Pradhan - Maximal Capital - Analyst : All the questions have been answered just on the main part, are we guiding for a flattish in the coming quarters, or is it expected to come down because of our secure is rapidly increasing?

Question: Hitaindra Pradhan - Maximal Capital - Analyst : So what is your breakup of external benchmark and NCLR and fixed rate book?

Question: Hitaindra Pradhan - Maximal Capital - Analyst : And on MFI, I understand your commentary is that in this particular month in April, guardrail has been implemented. The way I see the comment is basically you are seeing some dip in terms of how you would be able to disperse and find the credit worthy borrowers. So there can be a dip in disbursement and growth from an otherwise no life perspective. But on the credit cost per se, you are not finding any sort of difference. So the trend which was happening from February to March of increasing collection efficiency and lowering of even the forward flows, et cetera. So that is continuing in April for you as well as for industry as well. Is that the sort of the right in understanding, sir? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 12:00PM, RATB.NS - Q4 2025 RBL Bank Ltd Earnings Call