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RBL Bank — Q1 FY27 earnings call

Call held 17 Jul 2026

Management summary

RBL Bank reported a strong Q1 FY27 with a 27% YoY increase in net profit, driven by robust advances growth and improved asset quality. A significant INR 260 billion equity infusion from Emirates NBD substantially boosted capital adequacy and led to a credit rating upgrade. While other income saw a decline and credit card slippages remained elevated, management expects material improvement in margins and asset quality from Q3 FY27.

Highlights

  • Net Profit grew 27% YoY to INR 254 crores, up from INR 200 crores in Q1 FY26.

  • Advances grew 23% YoY to INR 1,16,223 crores, with average advances up 25% YoY.

  • Total Capital Adequacy Ratio reached 33.3% and CET-1 Ratio 32.2% following the INR 260 billion equity infusion from Emirates NBD.

  • Asset quality improved with GNPA at 1.3% (down 15 bps QoQ) and NNPA at 0.37% (down 2 bps QoQ).

  • Cost-to-income ratio improved to 64.7% from 65.1% last quarter, with pre-operating profit up 31% YoY to INR 923 crores.

  • Long-term credit rating upgraded to AAA Stable by ICRA, CARE, and CRISIL.

Concerns

  • Other Income decreased 10% YoY to INR 959 crores, primarily due to lower treasury income compared to Q1 FY26.

  • Credit card slippages and credit costs remained elevated, with net provision on advances at INR 597 crores, largely driven by INR 575 crores for credit cards.

  • Net Interest Margin (NIM) experienced contraction in the last two quarters, with retail disbursal yields also down.

Key financials

  1. Net Interest Income (NII) ₹1,654 Cr +12%YoY
  2. Other Income ₹959 Cr -10%YoY
  3. Total Net Income ₹2,614 Cr +2%YoY
  4. Operating Expenses (Opex) ₹1,691 Cr -8%YoY
  5. Pre-operating Profit ₹923 Cr +31%YoY
  6. Net Profit ₹254 Cr +27%YoY
  7. Advances ₹1.16L Cr +23%YoY
  8. Deposits ₹1.25L Cr +11%YoY
  9. CASA Ratio 29.2%
  10. GNPA 1.3% -0.15%QoQ
  11. NNPA 0.37% -0.02%QoQ
  12. Provision Coverage Ratio (PCR) 72%
  13. Credit Cost 0.54%
  14. Capital Adequacy Ratio 33.3%
  15. CET-1 Ratio 32.2%
  16. LCR 133%
  17. Cost-to-Income Ratio 64.7% -0.4%QoQ

What they filed

Q1 FY27: revenue up 11.6%, net profit up 27.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue3,531 3,536 3,476 3,441 3,507 −1%3,667 +4%3,720 +7%3,840 +12%
Net profit223 33 69 200 179 −20%214 +548%230 +233%254 +27%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • M&A RBL Bank Limited (stake acquired by Emirates NBD) Acquisition · Closed · Consideration ₹26,000 Cr (cash)

    Strategic investment by Emirates NBD to acquire a significant stake, boosting capital and enabling future growth.

    Boosted total capital adequacy to 33.3% and CET-1 ratio to 32.2%, enabling retirement of high-cost liabilities and future credit growth.

    Emirates NBD Bank infused approximately USD2.75 billion or INR260 billion, by way of preferential issue on a private placement basis to acquire 60% of the expanded share capital of RBL Bank at a price of INR280 on 18th of June 2026. ENBD is now classified as a promoter of the bank.

Guidance & targets

Market Share

  • FCNR Market Share Market Share · future · Medium confidence 1.5x-3x of current 0.5%
    You can consider us reaching in FCNR at least $1.5x--2x$ to 3x of that market share is what we are aiming to get in of whatever is going to be mobilized as the FCNR. Our share of FCNR will be 3x, 4x higher than the market share of deposits what we have enjoying it today.

    — R. Subramaniakumar

Margin

  • NIM Improvement Margin · Q2 FY27 · High confidence 30-50 bps
    Expect 30-50 bps improvement or 30 basis points, 40 basis points improvement should be expected at least in Q2. And I think till the time we get to some relative stability in terms of mix changes, both on liabilities and assets, we will have some level of difficulty in predicting precisely where the margin goes. But clearly, the intent is that margins will inch up because of equity over the next 3 to 6 months.

    — Jaideep Iyer

Asset Quality

  • Credit Card Slippages Asset Quality · Q3 FY27 · High confidence 5% handle

    From 11-12% today

    And I think while we will expect some reduction in Q2, but a material reduction should happen as we have guided in Q3 onwards. And we should clearly come down to the 5% handle by the time we hit Q3.

    — Jaideep Iyer

Cost of Funds

  • Savings Account (SA) Rate Cost of Funds · next 12-18 months · Medium confidence Gradually reduce

    From 6% today

    Yes, so SA rate, our peak rate is now at 6%. And I think we will want to gradually reduce this over time because ultimately, we have to also protect the customer franchise. So the attempt is to see how we can deepen the relationship with our high net worth, high-value SA customers over time and then gradually reduce. I think it is safe to assume that this will directionally come down over the next 12, 18 months.

    — Jaideep Iyer

Deposit Growth

  • Retail Deposit Growth Deposit Growth · future · Medium confidence 20%+
    And retail deposit growth, yes, it is going to be there. Our target is 20-plus and within 23%, 24%.

    — R. Subramaniakumar

Efficiency

  • Cost-to-Income Ratio Efficiency · next 1-2 quarters · High confidence 5-6 points reduction

    From 64.7% today

    The interest income is going to come with the capital infusion. It will further go down by another 5, 6 points in next 1 or two quarters.

    — R. Subramaniakumar

Profitability

  • Return on Assets (ROA) Profitability · Q2/Q3 FY27 · High confidence 1%
    Should start seeing 1% in Q2/Q3 zone. And I think after that, as credit costs in cards normalize, I think that should be the other fillip as we go into Q3 and Q4. So yes, I mean, I think 1% zip code is a given near term, and I think we should get better than that by the time we exit the year.

    — Jaideep Iyer

  • Return on Equity (ROE) Profitability · 3-4 years · Medium confidence Double digits
    We said that we make an aspirational effort for increasing it to double digits in the 3 to 4 years' time line.

    — R. Subramaniakumar

What to watch in Q2 FY27

NIM Improvement

Q2 FY27
Current Contracted in Q1 FY27
Target 30-50 bps improvement

Why it matters

Key profitability driver, expected to improve due to capital infusion and liability cost reduction.

Expect 30-50 bps improvement or 30 basis points, 40 basis points improvement should be expected at least in Q2. And I think till the time we get to some relative stability in terms of mix changes, both on liabilities and assets, we will have some level of difficulty in predicting precisely where the margin goes. But clearly, the intent is that margins will inch up because of equity over the next 3 to 6 months.

Risks & concerns

  • Elevated credit card slippages and credit costs

    high

    Credit card slippages have been elevated, leading to high credit costs, but are expected to materially decrease from Q3 FY27.

    Management acknowledged

  • Inflationary pressure

    medium

    Early signs of inflationary pressure are being monitored, though no material impact on the portfolio has been seen so far.

    Management watchful

  • Net Interest Margin (NIM) contraction

    medium

    NIM has contracted in the last two quarters, but management expects improvement from Q2 FY27 due to capital infusion and liability cost reduction.

    Management acknowledged

  • PSL target achievement

    medium

    Achieving Priority Sector Lending (PSL) targets is a challenge, but management is confident through microfinance, PSLC, and growth in GIFT City (PSL exempt).

    Analyst acknowledged

Q&A highlights

7 direct
Deployment of INR 26,000 crores fundraise Direct
Around INR 10,000 crores has been done. And the net 7.25% is the net rate which has been retired out of it. And we have redeployed some of them in the short term also, which is giving us around 6.7% to 6.8%. That is what we gained out of the redeployment. ... It was invested in the short term.

Clarifies the immediate utilization of the significant capital infusion, indicating a focus on liability management and short-term liquidity deployment.

Asked by Rikin Shah

Margin contraction and future outlook Direct
Expect 30-50 bps improvement or 30 basis points, 40 basis points improvement should be expected at least in Q2. And I think till the time we get to some relative stability in terms of mix changes, both on liabilities and assets, we will have some level of difficulty in predicting precisely where the margin goes. But clearly, the intent is that margins will inch up because of equity over the next 3 to 6 months.

Provides a clear forward guidance on NIM recovery, attributing it to the equity infusion and liability cost reduction, addressing a key profitability concern.

Asked by Rikin Shah

Credit card slippages and normalization timeline Direct
And I think while we will expect some reduction in Q2, but a material reduction should happen as we have guided in Q3 onwards. And we should clearly come down to the 5% handle by the time we hit Q3.

Addresses the elevated credit card slippages with a specific timeline for material reduction and normalization, which is crucial for asset quality and credit costs.

Asked by Rikin Shah

FCNR deposit targets and ENBD partnership Direct
You can consider us reaching in FCNR at least $1.5x--2x$ to 3x of that market share is what we are aiming to get in of whatever is going to be mobilized as the FCNR. Our share of FCNR will be 3x, 4x higher than the market share of deposits what we have enjoying it today.

Highlights a new strategic growth avenue for low-cost deposits, leveraging the Emirates NBD partnership and targeting specific market share multiples.

Asked by Rikin Shah

Cost-to-income ratio outlook with branch expansion Direct
The interest income is going to come with the capital infusion. It will further go down by another 5, 6 points in next 1 or two quarters.

Indicates continued focus on operational efficiency and profitability improvement, projecting a significant reduction in the cost-to-income ratio despite branch expansion plans.

Asked by Jeet Suchak

ROA and ROE targets Direct
Should start seeing 1% in Q2/Q3 zone. And I think after that, as credit costs in cards normalize, I think that should be the other fillip as we go into Q3 and Q4. So yes, I mean, I think 1% zip code is a given near term, and I think we should get better than that by the time we exit the year. ... We said that we make an aspirational effort for increasing it to double digits in the 3 to 4 years' time line.

Sets clear long-term profitability goals for the bank, with specific timelines for ROA improvement and an aspirational target for ROE.

Asked by Darshil Jhaveri

PCR decline Partial
PCR is a function of the policies that we have. We haven't changed any policy. So credit cards continues to be provisioned at 70% on 90 days and full provisioning on the 120th day. ... MFI provisioning is now covered by CGFMU.

Provides context on the bank's provisioning policies and the impact of slippage mix on PCR, clarifying that the decline is not due to a change in policy.

Asked by Rikin Shah

Unsecured vs Secured book yield differential Direct
Unsecured book yield is about 20% or so. ... Yes, that's correct. 11% is the overall average. So the rest of the book should be lower than 10%.

Offers insight into the profitability differences between the bank's unsecured and secured loan portfolios, informing the strategy for asset mix diversification.

Asked by Jeet Shah

3 min read 6 chapters

Detailed narrative

Q1 FY27 Financial Performance Overview

RBL Bank reported a net profit of INR 254 crores for Q1 FY27, marking a 27% increase YoY from INR 200 crores in Q1 FY26. Net Interest Income (NII) grew 12% YoY to INR 1,654 crores, while total net income increased 2% YoY to INR 2,614 crores. Operating expenses decreased 8% YoY to INR 1,691 crores, leading to a 31% YoY rise in pre-operating profit to INR 923 crores. The cost-to-income ratio improved to 64.7% from 65.1% in the previous quarter.

Emirates NBD Strategic Investment & Capital Position

Emirates NBD Bank infused approximately INR 260 billion (USD 2.75 billion) through a preferential issue on June 18, 2026, acquiring a 60% stake in RBL Bank, making ENBD a promoter. This significant capital infusion substantially boosted the bank's capital adequacy, with the total capital adequacy ratio reaching 33.3% and CET-1 ratio at 32.2%. Consequently, the bank's long-term credit rating was upgraded to AAA Stable by ICRA, CARE, and CRISIL.

Deposit and Advance Growth Dynamics

Total deposits grew 11% YoY to INR 1,24,829 crores, with average deposits up 24% YoY. Granular deposits (less than INR 3 crores) increased 13% YoY and constituted 52.4% of total deposits, while the CASA ratio stood at 29.2%. Advances grew 23% YoY to INR 1,16,223 crores, driven by 38% YoY growth in wholesale advances and 18% YoY growth in secured retail advances. Post the equity infusion, the bank strategically chose not to renew certain high-cost wholesale deposits, utilizing the new liquidity efficiently.

Asset Quality and Provisioning Trends

Asset quality showed improvement, with Gross Non-Performing Assets (GNPA) decreasing by 15 basis points QoQ to 1.3% and Net Non-Performing Assets (NNPA) falling by 2 basis points QoQ to 0.37%. The Provision Coverage Ratio (PCR) was 72%. While credit card slippages remained elevated, contributing INR 575 crores to the net provision of INR 597 crores, management expects a material decrease in slippages from Q3 FY27, aiming for a 5% handle, supported by improved early delinquency trends.

Net Interest Margin (NIM) Outlook

The bank experienced margin contraction in the last two quarters due to factors such as repo rate cuts and the runoff of high-cost SA buckets. However, management anticipates a 30-50 basis points improvement in NIM in Q2 FY27, with further inching up over the next 3-6 months. This recovery is expected to be driven by the capital infusion, a significant reduction in bulk deposit and borrowing costs, and a strategic shift towards a more secured retail asset mix. The bank also plans to gradually reduce SA rates over the next 12-18 months.

Strategic Growth Initiatives and Future Outlook

RBL Bank aims for 20%+ retail deposit growth, specifically targeting 1.5x-3x of its current 0.5% market share in FCNR deposits by leveraging the Emirates NBD partnership in the Middle East. The bank plans to enhance profitability by focusing on faster growth in secured products like business loans, housing loans, and gold loans, alongside better pricing discipline. Management expects the cost-to-income ratio to decrease by another 5-6 points in the next 1-2 quarters and targets an ROA of 1% by Q2/Q3 FY27, with an aspirational double-digit ROE within 3-4 years.

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