RBL Bank Q3 Profit Soars 555% to ₹214 Crore in FY26

Introduction to RBL Bank's Q3 Performance

RBL Bank reported a robust financial performance for the third quarter of fiscal year 2026, ending December 31, 2025. The private sector lender announced a remarkable 555% year-on-year surge in its net profit, which stood at ₹214 crore. This substantial growth compares favorably to the ₹33 crore profit recorded in the same quarter of the previous fiscal year and the ₹179 crore profit from the preceding June quarter. The primary drivers behind this impressive result were a significant reduction in provisions for bad loans and consistent growth in the bank's core operations.

Core Earnings and Margin Expansion

The bank's core net interest income (NII) saw a steady increase of 5% year-on-year, reaching ₹1,657 crore. This growth was supported by a healthy 14% expansion in net advances. Furthermore, the Net Interest Margin (NIM), a key indicator of profitability, improved by 12 basis points to 4.63%. According to R Subramaniakumar, the bank's Managing Director and CEO, strategic adjustments in deposit rates and a calculated shift in the advances portfolio were instrumental in widening these margins. The management anticipates further margin expansion in the upcoming quarters, even considering a potential rate cut by the RBI.

Detailed Financial Breakdown

Operating profit for the quarter, after adjusting for a one-off income event in Q3 FY25, grew 7% year-on-year and 25% sequentially to ₹912 crore. However, the reported profit was impacted by a one-time pre-tax expense of ₹32 crore due to a revision in the definition of wages under new labor codes. Other income, excluding one-off gains, grew 13% year-on-year to ₹1,050 crore. Operating expenses rose by 8% to ₹1,795 crore, but the bank improved its efficiency, with the cost-to-income ratio declining to 66.3% from 70.7% in the previous quarter.

Asset Quality Shows Significant Improvement

A key highlight of the quarter was the marked improvement in asset quality. The Gross Non-Performing Assets (GNPA) ratio declined by 45 basis points sequentially to 1.88% as of December 31, 2025. This improvement was attributed to higher write-offs and lower fresh slippages. The Net NPA ratio also saw a slight improvement, standing at 0.55%. The bank maintained a strong Provision Coverage Ratio of 93.2%, including technical write-offs, indicating a solid buffer against potential loan losses.

Advances and Deposits Growth

The bank's balance sheet showed healthy expansion. Net advances grew 14% year-on-year to ₹1.03 lakh crore, with a retail-to-wholesale mix of 59:41. Within the retail segment, secured advances grew by a strong 24% YoY. Wholesale advances also performed well, rising 21% YoY, led by 30% growth in the commercial banking division. On the liabilities side, total deposits increased by 12% year-on-year to ₹1.2 lakh crore. Granular deposits, defined as those below ₹3 crore, grew at a faster pace of 15% YoY, constituting 51.5% of total deposits.

Focus on Credit Cards Amidst Challenges

Despite acknowledging elevated stress in the credit card segment, RBL Bank continues to push sales in this area. Fresh slippages during the quarter amounted to ₹909 crore, of which a significant portion, ₹574 crore, originated from the credit card and personal loans portfolio. Management expects the stress in the credit card book to persist for another two quarters, citing the challenging macroeconomic environment as a factor delaying resolutions on older portfolios.

Strategic Developments and Capital Position

RBL Bank is poised for a significant capital boost through a proposed $1 billion fund infusion from Emirates NBD Bank. The bank has already received shareholder approval for this transaction and the amalgamation of Emirates NBD's Indian branches. The deal is currently awaiting final regulatory and government approvals, which are expected to be secured by July. The bank's capital adequacy remains stable, with the total capital adequacy ratio at 14.94% and the CET-1 ratio at 13.45% as of December-end. The bank also expanded its physical presence by adding 18 new branches, bringing its total network to 580.

Management Outlook

MD & CEO R Subramaniakumar expressed confidence in the bank's operational performance, stating, "We continued to deliver strong growth in our focus areas, with secured retail advances and commercial banking driving asset side expansion while granular deposits supported on liability side." He also noted that collection efficiency in the joint liability group (JLG) business has materially improved, with disbursement rates returning to near-normal levels. The management's strategy remains focused on disciplined execution and leveraging its existing customer base for profitable growth.

Conclusion

RBL Bank's third-quarter results for FY26 demonstrate a strong recovery in profitability, driven by improved asset quality and steady growth in its core business. While challenges in the unsecured lending space, particularly credit cards, remain a key monitorable, the bank's overall financial health appears robust. The anticipated capital infusion from Emirates NBD is a significant future event that could further strengthen the bank's balance sheet and support its long-term growth ambitions.