Here's why Street rewarded RBL Bank, South Indian Bank, CreditAccess investors

SUMMARY

RBL Bank, South Indian Bank and CreditAccess stocks witnessed handsome gains and their surprise quarterly numbers was indeed rewarding for investors. Here's why these companies got a thumbs-up from the Street.

By Sandeep Singh May 13, 2022 7:51:28 PM IST (Published)

The earnings season has had its own set of hits and misses, but some companies have managed to win hearts of investors. RBL Bank, South Indian Bank and CreditAccess stocks saw handsome gains -- a rare sight in the recent turmoil -- as the lenders surprised investors with their quarterly numbers. Here's why these companies got a thumbs-up from the Street.

Friday's spike helped RBL Bank shares recover much of the week's losses, as investors gave a thumbs-up to the lender's net interest margin -- a key metric of profitability for financial institutions. Though the bank's net profit fell short of Street estimates, its NIM exceeded that of the country's largest lender, HDFC Bank, at 4%.

South Indian Bank shares spiked as a 126 bps sequential jump in its CASA ratio helped the lender reduce its annualised credit cost to 0.79 percent from 1.96 percent in the previous quarter. The bank reported a net profit of Rs 272 crore for the January-March period against a net loss of Rs 50.3 crore in the previous quarter. A decline in the slippage ratio -- which determines the proportion of new bad loans to standard loans -- to 2.3 percent from 2.78 percent sequentially aided its profitability.

J&K Bank's gross bad loans as a percentage of total loans came in at 8.67 percent from 8.93 percent in the previous quarter. The lender managed to maintain its net interest margin compared to last year despite lower loan growth. However, its new bad loans jumped 25.9 percent sequentially to Rs 1,010.7 crore, raising its slippage ratio by 104 bps to 5.74 percent.

Friday's jump turned the CreditAccess stock positive for the week as the financial institution's loan growth of 24-25 percent helped it cut down its credit cost by 20 bps to 1.8 percent. Investors also cheered CreditAccess's improving asset quality as its bad loans as a percentage of total loans nearly halved to 3.61 percent from 6.02 percent in the previous quarter.

The Ujjivan Small Finance Bank stock clocked a weekly higher thanks to the spike on Friday, as the lender saw a 220 bps sequential jump in its net interest margin boosted by a 19.9 percent jump in its net interest income. It also managed to reduce its gross bad loans by 245 bps to 7.34 percent.