RBL Bank overcomes falling deposit levels and focuses on mortgages and secured commercial loans

Private sector lender RBL Bank, which went through a stream in late December, is now on track and comfortably placed on deposits. “We are fortunately quite above the hump on this. Depositors have returned, there are deposit levels that are higher today than December 31, 2021, and even higher than when we announced our (Q3) results. We are sitting on around Rs 14,000 crore to Rs 15,000 crore of additional liquidity,” said Jaideep Iyer, Head of Finance, Strategy and Investor Relations, RBL Bank.

The private sector lender had reported a 2.58% drop in deposits quarter-on-quarter to ₹73,637 crore as of December 31, 2021, with retail deposits and deposits from small business customers falling by 11.3 % sequentially.

Nervousness subsided, says MD

Many depositors had withdrawn funds after the Reserve Bank of India appointed an additional administrator to its board and its managing director and CEO, Vishwavir Ahuja, went on leave. However, during the third quarter earnings call, the bank’s managing director and acting CEO, Rajeev Ahuja, said there was a brief challenge to deposits in the last week of December. , but had since recovered and were above December 24, 2021 levels.

In an interaction with Activity area, Iyer attributed it to the nervousness of the filers, but said he had since calmed down. The appointment of a Managing Director and CEO, the process of which is currently underway, would provide additional certainty.

The pressure on deposits is gone, but overall deposit growth will remain subdued as the lender strives to drop bulk deposits, he said.

“We don’t want deposits beyond advance growth,” Iyer said, adding that advances will grow by about 10-15% as the lender seeks to rebalance its portfolio. “We have also deliberately chosen not to do any insecure retail business other than credit cards and microfinance. These will be replaced by more mortgages, more secured commercial loans and more middle market wholesale loans, which will give us all a higher margin,” he said.

Iyer said the bank wants to move towards a strategy of lower earnings volatility due to fluctuations in credit costs due to events like Covid, strengthening the balance sheet and not necessarily changing overall growth, but focusing on growth. profitable.

Published on

March 05, 2022

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