RBL BANK 2022-23 Annual Report Analysis

Sun, 6 Aug

RBL BANK has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the bank during the year 2022-23.

RBL BANK Income Statement Analysis

• Interest income during the year rose 13.1% on a year-on-year (YoY) basis.
• Interest expenses were up by 12.8% YoY during the same period.
• Operating expenses increased by 28.6% YoY during the year.
• The bank's net interest income (NII) increased by 13.4% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 4.9% in FY23 as against 5.2% in FY22.
• Other income increased by 6.6% YoY during the year.
• Net profit for the year increased by 653.5% YoY.
• Net profit margins during the year increased to 9.6% in FY23 from -2.0% in FY22.

RBL BANK Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	84,449	95,496	13.1%
Other Income	Rs m	23,515	25,069	6.6%
Interest Expense	Rs m	41,482	46,786	12.8%
Net Interest Income	Rs m	42,966	48,709	13.4%
Operating Expense	Rs m	39,942	51,348	28.6%
Pre-provision Operating Profit	Rs m	26,539	22,431	-15.5%
Provisions & Contingencies	Rs m	28,200	13,235	-53.1%
Profit before tax	Rs m	-2,065	12,211	691.3%
Tax	Rs m	-404	3,016	847.3%
Profit after tax	Rs m	-1,661	9,195	653.5%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	5.2	4.9
Net profit margin	%	-2.0	9.6

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RBL BANK Balance Sheet Analysis

• The bank's deposits during FY23 stood at Rs 848.7 bn as compared to Rs 790.1 bn in FY22, thereby witnessing an increase of 7.4%.
• Advances for the year stood at Rs 701.9 bn as compared to Rs 600.0 bn during FY22, a rise of 17.0%.
• Cost of deposits for RBL BANK rose 5.4% and stood at 4.7%, while yield on advances fell to 10.8%.
• The lender's investments rose to Rs 287.3 bn during the year from Rs 221.3 bn in FY22.
• Borrowing stood at Rs 133.3 bn, a growth of 20.1% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 1,158.1 bn as against Rs 1,061.6 bn during FY22, thereby witnessing a rise of 9.1%.

RBL BANK Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	125,199	134,507	7.4%
Advances	Rs m	600,046	701,864	17.0%
Deposits	Rs m	790,064	848,747	7.4%
Yield on advances	%	11.0	10.8
Cost of Deposits	%	4.5	4.7
Investments	Rs m	221,292	287,303	29.8%
Borrowings	Rs m	110,978	133,317	20.1%
Total Assets	Rs m	1,061,626	1,158,057	9.1%

Current Valuations for RBL BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 15.3, an improvement from the EPS of Rs -2.8 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 216.2, stands at 8.6 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 1.0 times, while the price to income ratio stands at 0.8 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	140.9	159.3
Earnings per share (Unadj.)	Rs	-2.8	15.3
Diluted earnings per share	Rs	-2.8	15.3
Avg P/E ratio	Rs	-62.2	8.6
Avg P/ABV ratio	Rs	0.5	1.0
Avg Market Cap	Rs	103,311	78,948
Dividends per share (Unadj.)	Rs	0.00	1.50

Ratio Analysis for RBL BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 82.7x during FY23, from 75.9x during FY22. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio increased and stood at 7.30x during FY23, from 7.20x during FY22. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): RBL BANK's capital adequacy ratio (CAR) was at 16.9% as on 31 March 2023 as compared to 16.8% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank improved and stood at 6.8% during FY23, from -1.3% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank improved and stood at 0.79% during FY23, from -0.16% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank improved and stood at 7.50% during FY23, from 1.70% during FY22. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. RBL BANK's gross NPA ratio stood at 3.4% as of 31 March 2023 compared to 4.4% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of RBL BANK was 1.1% in financial year 2023. This compared with 1.3% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	75.9	82.7
Debt to Equity Ratio	x	7.2	7.3
Loans / Deposits	x	0.1	0.2
Capital Adequacy Ratio	%	16.8	16.9
Return on Equity	%	-1.3	6.8
Return on Assets	%	-0.2	0.8
Return on Capital Employed	%	1.7	7.5
% of Gross NPAs	%	4.4	3.4
% of Net NPAs	%	1.3	1.1
Yield on Advances	x	11.0	10.8
Yield on Investments	x	7.2	6.1

To see how RBL BANK has performed over the last 5 years, please visit here.

RBL BANK Share Price Performance

Over the last one year, RBL BANK share price has moved up from Rs 96.4 to Rs 216.2, registering a gain of Rs 119.8 or around 124.2%.

Meanwhile, the S&P BSE BANKEX is trading at 50,428.6 (up 0.7%). Over the last one year it has moved up from 43,550.8 to 50,428.6, registering a gain of 6,877.7 points (up 15.8%).

Overall, the S&P BSE SENSEX is up 12.6% over the year.

(To know more, you can check out historical annual results for RBL BANK here and quarterly results for RBL BANK here)