RBL Bank experienced a notable surge in its stock price after reporting significant growth in its advances and deposits for the second quarter of FY25 (Q2FY25). The private sector lender witnessed a 15% year-on-year (YoY) rise in its gross advances, coupled with a 20% YoY increase in total deposits, leading to positive momentum in the stock market.
RBL Bank reports 15% growth in gross advances
As of September 30, 2024, RBL Bank's gross advances stood at ₹89,786 crore, reflecting a 15% YoY increase compared to ₹78,170 crore in Q2FY24. The substantial rise in advances highlights the bank's continued growth and expansion in its lending portfolio. Investors looking to invest in stocks related to banking can observe such steady growth as a positive indicator of performance.
Strong deposit growth complements advances
In addition to the rise in gross advances, RBL Bank reported an impressive 20% YoY growth in total deposits, reaching ₹1,08,028 crore by the end of Q2FY25. This growth in deposits strengthens the bank's financial base, which is crucial for supporting its lending activities and further expansion. For those looking to invest in stocks, this growth in deposits may serve as an indicator of the bank's solid performance and customer trust.
CASA ratio and liquidity coverage ratio performance
RBL Bank's Current Account Savings Account (CASA) stood at ₹36,221 crore as of September 30, 2024, representing a 13% YoY increase from ₹32,089 crore in Q2FY24. However, the CASA ratio slightly declined, standing at 33.5% in Q2FY25, compared to 35.7% during the same period last year. While this decrease may be of interest to investors, it is balanced by the bank's overall growth in deposits and advances.
In terms of liquidity, the bank's liquidity coverage ratio (LCR) was reported at 129% as of September 30, 2024, a decrease from 142% in Q2FY24. The LCR measures the bank's ability to meet its short-term financial obligations, and while it has decreased compared to the previous year, it remains above regulatory requirements. Investors monitoring banking stocks may take this metric into account when considering their options to invest in stocks.
Net interest income and asset quality
RBL Bank's net interest income (NII), a key indicator of profitability, grew by 19.5% YoY, reaching ₹1,699.9 crore in Q2FY25 compared to ₹1,422.3 crore in the corresponding quarter of the previous year. This growth reflects the bank's ability to generate income from its core lending activities, which may attract investors looking to invest in stocks related to profitable banking institutions.
In terms of asset quality, the bank's gross non-performing assets (GNPA) increased slightly to 2.69% in Q2FY25 from 2.65% in the previous quarter. Although this rise is minimal, it is a metric worth monitoring for those considering long-term investments in banking stocks. Investors often evaluate GNPA figures when deciding whether to invest in stocks, as it provides insight into the bank's ability to manage credit risk.
Key takeaways
RBL Bank's strong performance in Q2FY25, marked by a 15% rise in gross advances and 20% growth in deposits, has resulted in a notable increase in its share price. The bank's continued profitability, reflected in its 29% YoY profit growth, along with its solid advances and deposit growth, makes it a company worth watching for investors considering options to invest in stocks within the banking sector.
As the bank continues to expand and diversify its offerings, it may present further opportunities for those looking to capitalise on growth within the financial services industry.
For android only