RBL Bank | Assetmultiplier

RBL Bank financially strong, well-capitalized & profitable: Vishwavir Ahuja, MD & CEO

Update on the Indian Equity Market:

The sell-off continued on Wednesday and Nifty fell from 8,967 levels on Tuesday to end at 8,469. All sectoral indices closed in the red except Media (+0.4%). Private Bank (-6.9%), Financial Services (-6.7%), and Realty (-6.2%) bore the brunt of the sell-off. The top gainers for the day were Zee Entertainment (+26.2%), Yes Bank (+4.2%), and ITC (+1.5%) while the losers were IndusInd Bank (-24.6%), Infratel (-22.5%), and Kotak Bank (-11.2%).

RBL Bank financially strong, well-capitalized & profitable: Vishwavir Ahuja, MD & CEO

Excerpts from an interview with Mr. Vishwavir Ahuja, MD & CEO, RBL Bank published in Mint dated 18th March 2020:

Although the moratorium announcement on Yes Bank has raised concerns around certain private sector banks’ stability, RBL bank has been maintaining a very significant liquidity surplus position. The bank had previously announced they were running a very high level of liquidity coverage ratio (LCR). Even other liquidity buffers are in place in terms of cheap refinance lines, other lines of credit.
In the last few days, one- two state government organizations have been pulling out some money and that’s across all private sector banks. That’s perhaps why the RBI formally reached out to them and said they should not be doing that. The RBI governor has emphasized that the private sector banks should be the recipients of government deposits and that is required for the development and stability of the entire financial system.
He further said that they did not see any withdrawals on March 16, 2020. Their retail deposit base has been very stable over the past few days. He feels that the 3 % reduction in the previous one week is not material as they enjoyed extreme liquidity comfort.
Liquidity is not flowing into the system for many reasons but they have not seen any account closures. According to him, institutions are trying to play safe and they take the money out for one or two days and then it comes back to the bank.
The overall impact has been insignificant. On the retail side, there is significant stability and in the last week, the proportion of retail to total deposits has improved.
RBL Bank is a technology and digitally focused bank and very active in the fintech and cash management space. As a result, they have been able to pick up many mandates in the corporate cash management and digital payment space.
Without naming the clients, he said that as many as six very high-profile marquee names, on the national side have moved their corporate cash management accounts to the bank. There is a big opportunity in the corporate sector for the bank.
In terms of financial parameters such as capital adequacy, asset quality, business engines of the bank, all are intact.
The total percentage of state government deposits in the overall deposit number is in single digits, and not very significant.
He added that Covid-19 will certainly vitiate the economic activity in the country and will also need a response at all levels, including the government and central bank.

Consensus Estimate: (Source: market screener website)

The closing price of RBL Bank was ₹ 167/- as of 18-March-2020. It traded at 0.8x/ 0.7x/ 0.6x the consensus book value estimate of ₹ 207/ 232/ 266 for FY20E/ FY21E/ FY22E respectively.
The consensus target price for RBL Bank is ₹ 387/- which implies a PB multiple of 1.5x on FY22E BV of ₹ 266/-.

By Maitreyee Vaishampayan RBL Bank banking, capital adequacy, RBI 0 Comments Read more...

RBL Bank: No Insider Trading worries, Expect growth of ~20-25%.

Dated: 5th September 2019

Update on the Indian market:

After the big fall on Tuesday, NIFTY opened lower on Wednesday but recovered towards the close of the day at 10,845, up 0.4%. Amongst the NSE 50, top gainers were Tata Steel (+2.9%), BPCL (+2.8%) and IOC (+2.8%) while the worst performers were Maruti (-4.0%), Sun Pharma (-3.0%) and Britannia (-3.0%). In the Sectorial Nifty Indices, the Metal (+1.6%), Bank (+1.1%) and Financial Services (+1.0%) were top gainers while Auto (-1.7%) was the worst performer followed by Media (-0.6%).

RBL Bank: No Insider Trading worries, Expect growth of ~20-25%.

Key takeaways from the interview of Mr Vishwavir Ahuja, MD & CEO, RBL Bank; dated 29 August 2019 with ET Now:

· Some articles hinted insider trading activity led big drop in the RBL Bank stock price after Coffee Day Chief VG Siddhartha had gone missing. Clarifying on these accusations, Mr Ahuja said that the 27 employees who sold RBL shares on 30^th July 2019 were mid or junior level staff and it was a routine activity. The transactions were within the stipulated guidelines of SEBI.

· The company did not receive any request form SEBI asking for clarifications on the above transactions. There was no breach of code. None of the transactions was done by any of the key managerial personnel. ~3 lakh shares were traded which is not a very large volume.

· On being asked about the banks’ exposure to Coffee Day Enterprises Ltd; Mr Ahuja replied that RBL Bank does not make any comments on any specific exposure or specific clients.

· The Capital Adequacy Ratio of RBL Bank is healthy at 12.5% and the management doesn’t expect requirement of any capital infusion for the coming 9-12 months even at reasonable levels of growth.

· The corporate growth will be relatively low in the given environment and other factors; the overall growth for the bank is likely to be in the 20-25% range.

· Amidst the Agri crises, RBL Bank will remain un-impacted due to low exposure to the Agri loans (to the tune of ~2-2.5% of the portfolio).

Consensus Estimate (Source: market screener website)

· The closing price of BLSTR was Rs 324/- as of 04-September-19. It traded at 1.6x / 1.3x / 1.1x the consensus book value for FY 20E / FY 21E / FY 22E of Rs 208 / 242 / 287 respectively.

· Consensus target price of Rs 548/- implies a P/BV of 1.9x on the FY22E book value of Rs 287/-