RBL Bank said on Tuesday that speculation linking the appointment of R Subramaniakumar with its asset quality challenges is “baseless and unfounded”. The statement from the private sector lender’s management gave some relief to investors as the stock rebounded from a record low hit the previous day.
The lender reiterated that it is well provided and does not foresee any asset quality challenges.
The RBL Bank stock rose by as much as Rs 3.2 or 3.6 percent to Rs 91.1 apiece on BSE from Monday’s record closing low of Rs 87.9 apiece.
Given the strong provision coverage, lower delinquency trends and strong recovery visibility from the gross non-performing asset (NPA) book, credit costs for the year ending March 2023 are expected to be materially lower than the previous year, RBL Bank said in a regulatory filing on Tuesday.
“The bank also remains well capitalised and post its recent Tier 2 capital raise on May 13, 2022, from United States International Development Finance Corporation, America’s development finance institution, the capital adequacy ratio has increased to approx 17.8 percent,” it added.
On Monday, CLSA said the incoming CEO’s appointment raises several questions, and the stock lacks material near-term triggers though it looks cheap.
It also said that RBL Bank’s asset quality situation and outlook remained manageable versus the situations seen at YES Bank and Lakshmi Vilas Bank.
Ashika Institutional Equity Research suspended coverage on the bank on Monday and said it would remain suspended “till further clarity”, according to media reports.
Market expert Prakash Diwan told CNBC-TV18 on the same day that many positive changes in the bank might take time.
“In the short term, there is an acknowledgement of the fact that there is something amiss, and that needs to be looked at, which means the stock could probably still lose some ground. It’s already lost significantly; it’s closer to its 52-week lows, and it’s exactly half of the 52-week high,” he said.
A banking veteran, Subramaniakumar is the former head of business transformation at Punjab National Bank. He has also served as administrator of Dewan Housing Financial Corporation.
“I’m just entering at a stage where growth is going to be a norm. I’m pretty confident that we will be in a position to join hands with the current management that has proven itself, and we will be able to launch our growth path,” he told CNBC-TV18.
RBL’s net interest income — or the difference between interest earned and interest paid — jumped 24.9 percent on a year-on-year basis to Rs 1,131.4 crore, ahead of an estimated Rs 1,056.2 crore in a CNBC-TV18 poll of analysts.
