RBL Bank's Transformative Quarter: Capital Infusion, Digital Drive, and Strategic Growth

RBL Bank Limited has concluded a pivotal quarter, Q2 FY26, marked by a landmark strategic transaction that promises to reshape its future trajectory. The bank reported a net profit of INR179 crore, with Net Interest Income (NII) growing 5% quarter-on-quarter (QoQ) to INR1,551 crore, achieving a Net Interest Margin (NIM) of 4.51%. Core Fee Income also saw a robust 17% QoQ increase, reaching INR926 crore, contributing to an operating profit of INR728 crore. This performance comes amidst significant strategic moves aimed at bolstering capital, enhancing digital capabilities, and diversifying income streams.

The headline event of the quarter is the proposed strategic investment by Emirates NBD, the second-largest bank in the UAE. This transaction involves a US$3 billion (approximately INR42,000-44,000 crore) preferential issue for a 60% stake, subject to regulatory and shareholder approvals. This capital infusion is set to position RBL Bank among India's best-capitalized banks, enabling accelerated growth across its existing businesses and significant investments in technology, brand, and distribution. Management anticipates this partnership will create stronger and more diversified income streams, leveraging Emirates NBD's global banking expertise and access to the vibrant trade corridor between India and the Middle East. This move signifies RBL Bank's transition from a phase of stability to one of sustained, profitable growth.

*Note: Other Income for Q2 FY26 was impacted by Rs. 44 crore on account of MTM on unlisted equities.

Business Segment Performance and Asset Quality

Loan book growth was robust, with advances crossing the INR1 lakh crore mark. Retail advances grew 10% year-on-year (YoY) and 6% QoQ to INR60,131 crore, despite a 9% YoY de-growth in unsecured retail advances. Secured retail advances, however, surged 30% YoY and 10% QoQ. Wholesale advances grew 22% YoY and 7% QoQ to INR40,397 crore, with Commercial Banking growing at 34% YoY. The bank's strategy of granularizing its advances and deposits continues to yield positive results, with granular deposits (less than INR3 crore) growing 14% YoY and accounting for 51% of total deposits.

Asset quality showed significant improvement, with Gross Non-Performing Assets (GNPA) down 55 basis points (bps) YoY to 2.32%, and Net Non-Performing Assets (NNPA) down 22 bps YoY to 0.57%. The Provision Coverage Ratio (PCR) stood at 75.92%, increasing to 92.74% including technical write-offs. Credit cost for Q2 FY26 was 54 bps. While the credit card portfolio still faces some stress, with slippages expected to normalize over the next 1-2 quarters, management noted that retail secured products have turned PBT positive, and most segments are expected to contribute to profitability by year-end, excluding prime housing.

Digital Innovation and Strategic Initiatives

RBL Bank continues to drive digital transformation, launching several new UPI features during the Global Fintech Festival 2025, including OS-native Biometric Authentication, IoT Payments, UIDAI Face Authentication for PIN Reset, and an SLM Chatbot. The bank also introduced the RBL Bank Humsafar Prepaid Card with NCMC functionality and a unique QR-on-card solution for instant top-ups on transit prepaid cards. The IMPS Simplified flow has been enabled on Retail Internet Banking, streamlining mobile payments.

Strategic partnerships are expanding the bank's reach in payment aggregation and remittances. RBL Bank partnered with CAMSPAY and Open Financial for acquiring settlement services and integrated BharatPe for UPI acquiring. In remittances, it went live with Panda Remit for international money transfers. These initiatives underscore the bank's commitment to leveraging technology and partnerships for superior customer experiences and operational efficiency.

Outlook and Management Commentary

Management guidance indicates a positive outlook, with expectations of NIM improvement by 10-15 bps every quarter, targeting an exit NIM of 4.75-4.80% by March. The MFI portfolio is expected to return to pre-COVID stability soon. The capital infusion from Emirates NBD is anticipated to significantly enhance the bank's growth capacity and allow for strategic investments in technology and distribution. The bank aims to leverage this strengthened position to scale existing businesses and explore new opportunities in cross-border transactions and NR business. RBL Bank's disciplined execution and strategic clarity position it for sustained, profitable growth in the evolving Indian banking landscape.