RBL Bank Faces Profit Drop Amid Asset Quality Challenges

RBL Bank shares plummeted by 14%, hitting a 52-week low, after announcing a 24% drop in net profit due to asset quality issues primarily from credit card and microlending books. The challenges stem from industry-wide microfinance problems and internal issues in credit card transition.

Shares of RBL Bank fell sharply by 14% on Monday, reaching a 52-week low of Rs 176.50, following the announcement of a 24% decline in net profits for the September quarter. This decline, to Rs 223 crore, is attributed to ongoing asset quality issues, notably in the credit card and microlending sectors.

The bank's reported profit in the previous September stood at Rs 294 crore, with a higher Rs 372 crore in the June quarter. CEO and MD R Subramaniakumar highlighted that the microfinance stress is due to broader industry challenges, while the credit card issues are related to internal transitions flagged by regulators.

A bank official suggested that while credit card challenges might stabilize by the third quarter's end, issues in the microlending segment could persist. Notably, fresh slippages doubled to Rs 1,026 crore, with 70% from credit cards and the remainder from microfinance.

(With inputs from agencies.)