RBL Bank (RBLBANK) Q1 25/26 earnings summary

Executive summary

• Net advances grew 9% year-over-year and 2% sequentially to ₹94,431 crore, led by secured retail and commercial banking; deposits increased 11% year-over-year and 2% sequentially to ₹112,734 crore, with granular deposits (below ₹3 crore) rising 16% year-over-year and now comprising 51.4% of total deposits.

• Net profit for Q1 FY26 was ₹200 crore, down 46% year-over-year but up 192% sequentially; consolidated net profit was ₹21,422 lakh, up from ₹8,699 lakh in the previous quarter but down from ₹35,105 lakh year-over-year.

• Board approved unaudited standalone and consolidated financial results for the quarter ended June 30, 2025, with limited review reports and an unmodified conclusion.

• The bank maintained a robust capital position with a total capital adequacy ratio of 15.59% and CET1 at 14.05%.

• Focus remains on improving asset quality, cost efficiency, and customer-centric digital initiatives, with digital transformation and ESG initiatives advancing.

Financial highlights

• Net Interest Income (NII) declined 13% year-over-year to ₹1,481 crore, while other income rose 33% year-over-year to ₹1,069 crore; operating profit fell 18% year-over-year to ₹703 crore.

• Net Interest Margin (NIM) dropped to 4.5% from 4.89% in the previous quarter and 5.67% year-over-year.

• Operating expenses increased 12% year-over-year and 9% sequentially, mainly due to higher collection costs in cards; cost-to-income ratio stood at 72.4%.

• Provisions were ₹442 crore, up 21% year-over-year but down 44% sequentially.

• Pre-provision operating profit (PPOP) was ₹703 crore; PAT for the quarter was ₹200 crore.

Outlook and guidance

• Margins are expected to have bottomed out in Q1, with improvement anticipated from Q3 as deposit costs decline and loan repricing stabilizes; deposit rate cuts are expected to yield results from Q2 FY26 onwards.

• Cost growth is expected to moderate and align with advances growth, with cost-to-income ratio trending down as margins recover.

• Credit costs are guided to remain below 2%, with normalization in card and microfinance slippages expected in H2.

• ROA is targeted to reach 1% on an exit basis by Q4.

• Operating expenses, especially in credit cards, are expected to be rationalized in coming quarters.