Concall AI

RBL Bank — Q2 FY26 earnings call

Call held 19 Oct 2025

Management summary

RBL Bank reported a quarter of steady operational progress, with advances crossing the INR1 lakh crore mark and continued strengthening of its balance sheet through granularization of deposits and a shift towards secured retail assets. The call was dominated by the landmark announcement of Emirates NBD's strategic investment of US$3 billion for a 60% stake, which is expected to significantly boost the bank's capital, accelerate growth, and enhance its global banking capabilities. Management expressed confidence in leveraging this partnership to scale existing businesses and explore new opportunities, while also addressing ongoing asset quality normalization in credit cards and MFI segments.

Highlights

Advances crossed INR1 lakh crores.
Secured business loans exceeded INR10,000 crores.
Secured working capital and tractor finance portfolios crossed INR2,000 crores and INR3,000 crores, respectively.
Granular deposits increased to 51% from 43% a few years ago.
Term deposits below INR3 crores grew at a CAGR of 21% over the past 3 years.
Secured retail loans now constitute 34% of advances, while unsecured retail reduced from 34% to 26% over 6 quarters.
Emirates NBD will invest approximately US$3 billion for a 60% stake, boosting net worth to INR42,000-44,500 crores.
A mark-to-market impact of INR40 crores was recorded due to a reduction in net worth of Utkarsh Small Finance Bank.
NIM is expected to improve by 10-15 basis points every quarter from Q3, targeting an exit NIM of 4.75-4.80% by March.

Key financials

01 Total Advances ₹1.00L Cr
02 Secured Business Loans ₹10,000 Cr
03 Granular Deposits 51%
04 Secured Retail Loans 34%
05 Unsecured Retail Loans 26%
06 Mark-to-Market Impact ₹40 Cr

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	3,531	3,536	3,476	3,441	3,507 −1%	3,667 +4%	3,720 +7%	3,840 +12%
Expenses	2,251	2,851	2,487	2,290	2,255	2,434	2,463	2,290
Other income	927	1,073	1,000	1,069	933	1,050	1,069	959
Interest	1,916	1,951	1,913	1,960	1,957	2,010	2,049	2,186
Depreciation	0	0	0	0	0	0	0	0
Profit before tax	292	-192	76	261	229 −22%	273 +242%	277 +264%	324 +24%
Tax rate	24%	-117%	10%	23%	22%	22%	17%	22%
Net profit	223	33	69	200	179 −20%	214 +548%	230 +233%	254 +27%
EPS	3.66	0.54	1.13	3.29	2.91	3.47	3.72	1.64

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.

Segment breakdown

Retail Secured Advances
25% Growth
Corporate Business
14% Growth
Commercial Business
32% Growth

Guidance & targets

Capital Adequacy

Net Worth Capital Adequacy · Post-deal completion · High confidence INR42,000-44,500 crores

R. Subramaniakumar: "This infusion will take our net worth to around INR42,000 crores and position us among the best capitalized banks in the country." Jaideep Iyer: "Including the branch merger, INR44,500 roughly, yes."

— R. Subramaniakumar, Jaideep Iyer

Profitability

Return on Assets (ROA) Profitability · Next couple of years · Medium confidence Materially expand

ROA will materially expand given the large inflow of equity.

— Jaideep Iyer
Return on Equity (ROE) Profitability · Within a couple of years · Medium confidence Reasonable levels

ROE will be a function of getting a reasonable leverage onto the books over the next couple of years after that. But given the very strong expansion in ROA that happens, we would expect to claw back to a reasonable level of ROE respectable levels of ROE within a couple of years.

— Jaideep Iyer
Net Interest Margin (NIM) Improvement Profitability · From Q3 onwards · High confidence 10-15 basis points improvement every quarter

We will expect from here on 10 to 15 basis points improvement every quarter.

— Jaideep Iyer
Exit NIM Profitability · March (FY26 end) · High confidence 4.75-4.80%

So we are yes, we will continue to hold a 475 to 480 exit in March.

— Jaideep Iyer
Segment Profitability (excluding prime housing) Profitability · By year-end · High confidence Contribute to profitability

And we expect all the segments barring prime housing to contribute to profitability by year-end.

— R. Subramaniakumar

Asset Quality

Credit Card Portfolio Slippage Normalization Asset Quality · 1-2 quarters · Medium confidence Normalize

I think the cards portfolio slippage will take a couple of quarters to normalize. So we will be in this range, give or take, for at least 1 to 2 quarters before we start seeing things improving.

— Jaideep Iyer
MFI Portfolio Stability Asset Quality · Soon · Medium confidence Return to pre-COVID levels

The MFI portfolio is normalizing well and we expect it to return to pre-COVID levels of stability soon.

— R. Subramaniakumar

Cost of Funds

Cost of Borrowings / Cost of Deposits Gap Cost of Funds · Over time · Medium confidence Materially narrow gap with large private sector banks

I would expect that gap to materially narrow over time.

— Jaideep Iyer

Growth

Overall Growth Growth · Near-term (without immediate investments) · Medium confidence 20%

But does the existing network and distribution franchise suggest that we have the potential to even grow at 20% or so without immediate investments?

— Rajeev Ahuja
Credit Cards Organic Growth Growth · By end of this quarter · Medium confidence Start showing organic growth

I think by the end of this quarter, card will also start showing organic growth.

— Rajeev Ahuja
Gold Loan Business Growth Growth · Medium confidence 3x-4x

All this business gold loan, which is a branch based, that is also get propelled and that is something which will be in terms of 3x, 4x because the gold is where the current trend, we will be able to get into the space of some of these NBFCs which are doing it.

— R. Subramaniakumar
SME and Commercial Banking Growth Growth · Medium confidence 2x-3x

And another very important point, what you can think about is in respect of the distribution point is going to create our visibility, and it will provide us a big opportunity for the SME and commercial banking. That is something which will also be an opportunity to grow to 2x, 3x.

— R. Subramaniakumar
Corporate Business Growth Growth · Medium confidence Much faster than 14%

There, we can see a large opportunity to grow at much faster than what we have been growing it.

— R. Subramaniakumar

Market Share

Overall Market Share Market Share · Medium confidence From 0.5% to 1%

Our market share is hardly 0.5% whereas the opportunity available is much, much larger. If I increase the distribution and we are in a position to build the capacity as we have been telling about you, this market share of 0.5 has an ability to go to 1.

— R. Subramaniakumar

Credit Cost

One-time ECL Transition Impact Credit Cost · Medium confidence 6-8% of current net worth

So Jai, broadly, the onetime transition should be in the range of about 6% to 8% of network, current net worth, not a material number.

— Jaideep Iyer
Ongoing Credit Cost (post ECL transition) Credit Cost · Medium confidence 60-65 basis points (from 40 bps today)

Previously 40 bps → 60-65 basis points (from 40 bps today)

So my rough estimate should be that the 40 basis points that we have today, maybe goes up to about 60 to 65 basis points.

— Jaideep Iyer

Recovery

MFI Recovery Rate Recovery · Medium confidence 0.9-1% per month

Previously 0.6-0.8% per month → 0.9-1% per month

See normally, the recovery is in the range of around 0.6% to 0.8% per month. So, this is something which we are working for increasing it to the tune of somewhere to 0.9% to 1%.

— R. Subramaniakumar

Risks & concerns

Credit Card Portfolio Stress
medium

The credit cards remain an area of focus as the bank addresses stress in older vintages, with slippages expected to normalize in 1-2 quarters.

Management acknowledged
Mark-to-Market Impact on Other Income
low

A one-time mark-to-market impact of INR40 crores was recorded as a reduction in other income due to a reduction in net worth of Utkarsh Small Finance Bank.

Management acknowledged
MFI Portfolio Normalization
low

The MFI portfolio is still in the process of normalizing, though expected to return to pre-COVID levels of stability soon.

Management acknowledged

Areas of evasion (3)

Specific details on capital allocation post-deal
Precise proforma financials for future years
Exact timelines for capital consumption

Q&A highlights

1 direct

Capital Allocation Strategy Post Emirates NBD Investment Partial

So I'll give a broad sense, the details of it, we can work and then discuss subsequently after the transaction is consumed. So broadly, we first scale all the existing businesses because all these businesses which we have already implemented as the clear growth path. So we will be in a position to scale that. That is one. The second, there are some new opportunities which will open up because of this particular transaction.

This question addresses how the bank plans to deploy the significant capital infusion, which is crucial for future growth and profitability. Management provides a directional answer but defers specific details until after the transaction is consumed.

Asked by Rikin Shah

Growth Acceleration and Capital Consumption Timeline Partial

See, right now, when you look at the opportunities, we don't say that the opportunities for inorganic cannot be ruled out. Yes, it is also the one more. First, we are working out very deeply with regard to organically how we can consume and grow multifold. Today, our capacity, which we have built it in respect of all the businesses, as well as delivery missionary will facilitate us to achieve a fairly higher growth level than what you have been seeing it for the last couple of quarters.

Analysts are keen to understand the pace of growth and how quickly the new capital will be deployed. Management indicates higher organic growth potential and doesn't rule out inorganic opportunities but avoids specific timelines for capital consumption.

Asked by Kunal Shah

Rationale for Emirates NBD Acquisition and Portfolio Reshaping Direct

One of the biggest attraction of RBL is the retail franchise and the retail growth story, which has been seen and its execution capacity. And, at the same time, not giving up its ability to grow in the corporate. This is the first basic principle and the vision with which strategy will be built thereafter. It will be by scale for the existing business and addition of the new business.

This question probes the strategic fit and future direction of RBL Bank under Emirates NBD's ownership, particularly concerning the balance between retail and corporate portfolios. Management clarifies that the retail franchise was a key attraction and the strategy will involve scaling existing businesses and adding new ones.

Asked by Anand Dama

3 min read 7 chapters

Detailed narrative

Strategic Partnership with Emirates NBD

RBL Bank announced a landmark strategic transaction with Emirates NBD, the second-largest bank in the UAE. Emirates NBD will invest approximately US$3 billion through a preferential issue to acquire a 60% stake in RBL Bank, subject to regulatory approvals. This infusion is projected to increase RBL Bank's net worth to around INR42,000-44,500 crores, positioning it among the best-capitalized banks in India. The partnership is expected to accelerate growth, enhance technology, brand, and distribution, and diversify income streams, leveraging Emirates NBD's global banking expertise and access to the India-Middle East trade corridor.

Q2 FY26 Operational Performance Highlights

During the quarter, RBL Bank's advances crossed the INR1 lakh crore mark, demonstrating steady growth. Secured business loans now exceed INR10,000 crores, with secured working capital and tractor finance portfolios crossing INR2,000 crores and INR3,000 crores, respectively. The bank's secured retail and commercial SME businesses continued to grow healthily, with retail secured advances growing between 25% and 35%. Corporate business grew around 14% and commercial business around 32% in the last quarter.

Asset Quality and Portfolio Mix

The bank continued its focus on strengthening the balance sheet by de-risking the portfolio. Secured retail loans now constitute 34% of total advances, while unsecured retail loans have been consciously reduced from 34% to 26% over the past six quarters. Net slippages remained near zero in wholesale and secured retail segments, which together account for nearly three-fourths of total advances. The MFI portfolio is normalizing well and is expected to return to pre-COVID levels of stability soon, with recovery rates targeted to increase from 0.6-0.8% to 0.9-1% per month.

Deposit Franchise Strength

RBL Bank's granular deposits have shown consistent growth, increasing from approximately 43% a few years ago to about 51% today. Term deposits below INR3 crores have grown at a Compound Annual Growth Rate (CAGR) of 21% over the past three years. The bank expects its cost of funds to materially narrow the gap with larger private sector banks over time, driven by continued retail engine growth on deposits.

Future Growth Strategy and Capital Allocation

With the significant capital infusion, RBL Bank plans to scale all existing businesses, particularly leveraging its retail franchise and execution capacity. New opportunities are expected in NR business, cross-border payments, trade, and corporate banking, especially with Indian corporates doing business in the UAE/GCC region. The bank aims to grow its gold loan business 3x-4x and SME/commercial banking 2x-3x, and increase its overall market share from 0.5% to 1%.

NIM Outlook and Profitability Targets

Management indicated that Net Interest Margin (NIM) bottomed out in Q1 FY26 and was flattish in Q2. They expect a 10-15 basis points improvement in NIM every quarter starting from Q3, targeting an exit NIM of 4.75-4.80% by March. All segments, with the exception of prime housing, are expected to contribute to profitability by year-end, with retail secured products already turning PBT positive as a cohort. The bank also anticipates ROA to materially expand and ROE to claw back to reasonable levels within a couple of years.

Credit Card and MFI Portfolio Update

The credit card portfolio remains an area of focus due to stress in older vintages, with slippages expected to normalize over the next 1-2 quarters. However, the bank anticipates the credit card business to start showing organic growth by the end of the current quarter. The MFI portfolio is normalizing, and the bank expects it to return to pre-COVID stability soon, with a technically written-off pool of approximately INR1,500 crores. The one-time impact of the ECL transition is estimated at 6-8% of current net worth, with ongoing credit costs potentially rising from 40 bps to 60-65 bps.

This is an AI-generated summary of a publicly available earnings call transcript.

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