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Chola Securities
RBL Bank (Underperform)
Target: ₹175
CMP: ₹181.95
In Q1FY22, RBL Bank’s advances declined to ₹56,520 crore (flat y-o-y/ down 4 per cent q-o-q). This was on account of decline in retail advances (+7 per cent y-o-y and down 7 per cent q-o-q) while wholesale advances registered an uptick (down 9 per cent y-o-y/1 per cent q-o-q). The bank has exited the unsecured business loan segment. Meanwhile, the management expects MFI book to scale up with a lag of 3 months. The bank expects retail book to take at least two quarters to recover as the wholesale book drives growth in the meantime. The bank is focused on ramping-up secured retail assets such as the housing segment with an aim to build a book of ₹10,000 crore in the next 2-3 years.
Retail book is expected to be subdued for the next 2 quarters on account of the bank’s cautious approach to MFI segment. On the credit card front, collection efficiency was impacted in Q1FY22 whilst growth too was impacted due to RBI’s ban on Master card.
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