Shares of RBL Bank rose over 1 percent on Friday, with the Street cheering management commenting that overall earnings are expected to be driven by lower provisioning. However, the stock shed its early gains and was down 5 percent on concerns the lender's growth could take time.

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At 11:54 IST, the lender's shares were trading 5.2 percent lower at Rs 90 on the BSE.

Management outlook

In a conference call with analysts, the lender said that the operating profit would remain slightly subdued, but overall earnings growth will be led by lower provisioning. The bank added that it would be a steady operating profit rather than an inch up.

In the earnings release, R Subramaniakumar, Managing Director & Chief Executive Officer, RBL Bank, said: “Our focus would be to consolidate, leverage and optimise our existing platform to accelerate the profitable growth of the balance sheet. We will continue to focus on our key niche areas of cards and microfinance while accelerating the diversification across more retail products.”

Here’s how the bank performed during the June quarter:

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Brokerage views

Credit Suisse cut its target price on the banking stock to Rs 86 from Rs 95 while noting that operating performance was muted, loans were flat sequentially, and net interest margin was down 15 basis points quarter-on-quarter.

The global brokerage firm has an ‘underperform’ rating on the stock. It also pointed out that the management is not looking to raise capital in the near term and that it expects growth to recover in the mid-teens.

Even as asset quality improved, the bank’s operating profitability weakened, the brokerage firm said.

RBL Bank snapshot

Total deposits in the June quarter came in at Rs 79,216 crore, which means a 6.4 percent growth from the previous year and 0.3 percent from the previous quarter.

Advances stood at Rs 60,270 crore, implying a nearly 7 percent year-on-year growth and 0.4 percent rise sequentially. CASA ratio was at an all-time high of 36 percent as compared to last year’s 33.67 percent and the previous quarter’s 35.29 percent.

(with inputs from Abhishek Kothari)

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