Investing 101

RBL Bank – Annual Report Takeaways!


RBL bank Annual report takeaways

Bank’s highlights –

Deposits grew to Rs 58394 Cr from 43902 Cr

Retail now contributes 70% of fee income.

The CASA ratio increased to 25% up 70 basis points y-o-y and was propelled by growth in SA deposits

Net NPA, for instance, stood at 0.69% in FY 2018-19 versus 0.78% in FY 2017-18.

This year the dividend recommended in 6% higher than our last year’s dividend of 21%. It is also 3% higher than their average incremental increase that we have been recommending every year. The additional 3% has been done to mark the completion of 75 years of existence of our bank.

They acquired complete ownership of Swadhaar Finserve in early FY 2018-19 and renamed it RBL Finserve – This acquisition gives us greater control in achieving our stated objective of strengthening our market position in the inclusive banking space. This business also has a thriving network of business correspondents (BCs) across the country. Details of Swadhaar below –

The credit card business has continued to show robust growth with a card base of 1.7 million cards. This business is among the top 5 in the industry in terms of retail spends per card as well as new card additions. This year also saw the RBL Bank – Bajaj Finance co-brand portfolio cross the 1 million cards mark, making it one of the largest co-branded card partnerships in the country. Below is cards business snapshot –

65 lakh + customers, 324 Bank Branches and 993 BC Outlets across 28 states and union territories.

Cards business – Acquired the credit cards portfolio of Royal Bank of Scotland back in 2014.

The GIFT CITY branch at the International Financial Services Centre (IFSC) in Gandhinagar, Gujarat, India reached the milestone of 1,500 Crore of business during the year.

Our Corporate and Institutional banking business attained a reasonable size and scale, and now has over 750 large corporate clients across 19 states of the country

Operational performance –

The Bank’s Net Total Income (defined as the sum of interest income and other income less interest expense) increased by 40.48% from Rs 2,834.47 Crore in FY 2017-18 to Rs 3,981.85 Crore in FY 2018-19. The increase was driven by growth in net interest income and other incomes. In FY 2018-19, the Bank earned a net profit of Rs 866.95 Crore as against Rs 635.09 Crore in FY 2017-18, an increase of 36.51%. Operating expenses increased from Rs 1,503.41 Crore in FY 2017-18 to Rs 2,042.02 Crore in FY 2018-19, primarily due to an increase in employee costs, outsourcing costs, new branch establishment, depreciation, technology, branding and communication expenses.

During FY 2018-19, Gross NPA decreased to 1.38% from 1.40% in FY 2017-18

The Bank’s net NPA decreased to 0.69% in FY 2018-19 compared to 0.78% in FY 2017-18.

Book value per share rose to Rs 171.93 in FY 2018-19 from R 155.99 in FY 2017-18.

During the fiscal FY19, the Bank had raised capital to the tune of R 100.54 crore through issuance/allotment of equity shares pursuant to exercise of stock options by the employees of the Bank under various Employees Stock Option Plans/ Schemes

During the year ended March 31, 2019, the Bank earned Rs 296.62 crore and spent Rs 179.05 crore in foreign currency

The percentage increase in the median remuneration of employees in the financial year was 4.36%.

Ratings – The Bank’s Basel III Tier II Bonds have been rated as “AA- hyb” and “AA-“with Stable Outlook by ICRA Limited (ICRA) and CARE Ratings Limited (CARE) respectively. The Bank’s Certificate of Deposits carries a rating of “A1+” by ICRA which indicates the lowest short term credit risk. The Bank’s short term fixed deposit program carries a rating of “ICRA A1+” which indicates lowest credit risk.

CSR spend – Rs 10.55 Crore in FY18-19

Total exposure to real estate 5008 cr

Total Deposits of the twenty largest depositors – 10,751.59 cr (18.41%)

Total Advances to twenty largest borrowers – 9,936.37 cr (11.71%)

Total Exposure to top four NPA Accounts (Gross) 197 cr

Forecast –

The bank is looking to ramp up its non-wholesale book to form about 50% of total advances in the next few years. Currently, it forms about 44.3% of their loans

In 2019-20, the bank will add another 60-80 branches with a focus on the metro and urban cities.  Here’s the current branch network –

Management Discussion Analysis (MDA) – The Fiscal year 2018-19 was one of the most challenging years for the banking sector. Credit growth remained muted, asset quality continued to deteriorate, liquidity concerns following NBFC credit squeeze hit banks and stricter provisions and governance issues kept regulatory activities dominant in the sector

The Bank’s Corporate and Institutional Banking (C&IB) business segment offers extensive services to enterprises and corporate entities, especially large-sized corporations (i.e. companies with over Rs 1,500 Crore annual turnover) – RBL Bank initiated a focussed segmental coverage for MNCs and on-boarded more than 20 reputed and well-established clients in the year.

Commercial Banking (CB) This segment of the Bank finances the business needs of Small and Medium-sized Enterprises (SMEs) (i.e. companies and firms with annual revenue from R 35 Crore to R 250 Crore) and mid-sized companies (i.e. enterprises and companies with annual revenue from R 250 Crore to R 1,500 Crore). – 19% of the Bank’s advances book is sourced by CB and the unit reported an advances growth of 12% y-o-y.

The Bank led the creation of a first-of-its-kind consortium of 14+ private and public sector banks to digitize inland trade as a ‘Make in India’ initiative in co-creating a comprehensive trade ecosystem, which uses blockchain and other innovative technologies as its backbone.

The unit Banking as a Service (BaaS) was established around three years ago. It primarily focuses on technology development and enhanced service delivery, offering a seamless banking experience to customers. The Unit provides industry-specific innovative solutions for businesses in the field of payment APIs, Unified Payments Interface (UPI), prepaid cards, merchant acquiring, nodal accounts, Aadhaar-Enabled Payment System (AEPS) and Domestic Money Transfer (DMT). With 6.90 Lakh PoS machines through merchant acquired channels, RBL Bank stands first in India for the total number of PoS machines deployed. In the year, business Correspondents helped the Bank in expanding the network to remote locations and successfully process transactions worth R 30,000 Crore through AEPS and DMT.

Customers are increasingly educated on various online channels, resulting in them migrating from traditional channels to online platforms. This has led to a growth in the premium collection across products by 60% this year.

RBL Bank is India’s only bank to offer foreign currency debit card services to diplomats. The Bank increased its market share in the diplomatic segment targeted base to 49%, maintaining a dominant market share. Currently, 70 embassies bank with RBL Bank, establishing it as a dominant player in this segment.

1,000+ start-ups are banking with RBL Bank.

The Bajaj Finserv RBL Bank Cards became the first co-branded Credit Cards in the Indian market to cross the 1 Million milestone, with 8,00,000+ cards sourced in FY 2018-19.

The Bank is among the 17 banks licensed by the Reserve Bank of India to import bullions for its clients. (Top 3 Banks supplying Bullion to the domestic market)

Concall –

BB and below assets – 1.75% of our current advances book. So, in absolute terms, it will be between 900 and 1,000 crores.

NFB – Non-Funding Based lending

Higher NFB (Non-funding based lending) creates a lot of risks; it’s just like selling a call option, collecting small premiums for higher risk. Generally, they would charge 2-2.5 % for NFB but if defaults happen like in case of Nirav Modi, the risk would be huge.

What is NFB? So if u want to import a machine from foreign, the bank gives a guarantee on your behalf and pays the money to the exporter by charging 2.5% on the amount. So if you default then the bank would have to bear the loss as PNB did.

In their lending, we see that the proportion of NFB is quite high in construction, metal, engineering which usually is a sector which takes projects with high gestation.

Bank’s balance sheet 


Vision 2020

Bank regularly meets its vision 2020 and is on track to achieve it.

Shareholding Pattern


Cash Flows of the Bank

ESOPs of the Bank (Vishwavir Ahuja exercised options at Rs 511)

Intra Group Exposures (nothing alarming here)

Borrowings Maturity Profile

Income Statement

Loan portfolio

Asset Quality

Out of 100% –

2.1% is AAA/AA+/AA

11.1% is AA-

32.6% A-/BBB+

47.3% is BBB-

7% is BB+ and below

This is the first article in my Annual report takeaway series and hence a small part only was analytical. But I promise with each article, it will become more analytical.

Thanks for reading.

Disclosure – Invested


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