RBL Bank Q2 FY27: Profit surge, fast balance sheet growth, and a close watch on deposit mix

RBL Bank’s investor presentation for the quarter ended 30 September 2026 shows a sharp improvement in profitability, supported by stronger net interest income, healthier fee income, and better operating efficiency. Net interest income rose 37% year on year to Rs 21,309 million, while net profit increased to Rs 4,818 million from Rs 1,785 million in the same quarter last year. Operating profit nearly doubled to Rs 13,961 million.

The quarter also reflects a bank that is scaling its balance sheet quickly. Net advances grew 42% year on year to Rs 1,423.14 billion, and deposits grew 34% to Rs 1,562.72 billion. Asset quality improved at the same time, with gross non-performing assets at 1.02% and net non-performing assets at 0.29%.

What drove earnings in Q2 FY27

A key driver in the quarter was the improvement in core earnings. Total income increased to Rs 32,083 million, up 29% year on year, while operating expenses grew only 3% to Rs 18,122 million. This combination improved the cost to income ratio to 56.5% from 70.7% in Q2 FY26.

Other income also expanded, rising to Rs 10,774 million. Core fee income was Rs 10,396 million, up from Rs 9,264 million in Q2 FY26.

At the margin level, the bank reported a net interest margin of 4.61% in Q2 FY27, up from 4.51% a year ago and 4.13% in Q1 FY27. However, the presentation also shows yield on advances declined to 10.80% from 12.26% in Q2 FY26. The cost of deposits eased to 5.94% from 6.26% over the same period, which helped support the net interest margin.

Financial summary (standalone, Q2 FY27)

Balance sheet growth and mix: retail and wholesale both expanding

As of September 2026, RBL Bank reported total assets of Rs 2,223.44 billion, up 44% year on year. Advances (net) were Rs 1,423.14 billion, while deposits were Rs 1,562.72 billion.

On the advances mix, the bank reported a retail to wholesale split of 56:44, with retail advances at Rs 794.65 billion and wholesale advances at Rs 628.49 billion. Within retail, the presentation highlights that secured retail advances constitute 65% of total retail advances. The advances profile section also shows unsecured retail advances at Rs 275.32 billion in Q2 FY27 versus Rs 259.43 billion in Q2 FY26, while secured retail grew materially to Rs 519.33 billion from Rs 341.88 billion.

In wholesale banking, the presentation provides a contribution split for Q2 FY27 gross advances across corporate, commercial and supply chain, financial institutions, and other niche segments. It also notes wholesale advances provided from the GIFT City branch were about Rs 139 billion as of 30 September 2026.

Deposits: strong growth, but lower CASA ratio than last year

Deposit growth remained strong in end-of-period terms, with deposits rising 34% year on year to Rs 1,562.72 billion. The presentation also provides average deposit metrics, showing overall average deposits at Rs 1,352.14 billion in Q2 FY27, up 24% year on year.

A point to track is the funding mix. Average CASA ratio was 24.0% in Q2 FY27 versus 28.5% in Q2 FY26. The bank also disclosed average granular deposits, defined as deposits less than Rs 30 million, at 49.5% in Q2 FY27.

The distribution network section adds context on where deposits are sourced. At the bank level, deposits were concentrated in metro and GIFT locations at 72%, followed by urban at 19%, semi-urban at 6%, and rural at 2%. The bank reported 628 branches, 1,326 business correspondent branches, 422 automated teller machines, and 15.05 million customers, with presence across 600 plus districts and servicing over 18,000 pin codes.

Asset quality and provisioning: improved ratios with continued provisioning

Asset quality metrics improved versus the prior year. Gross non-performing assets reduced to 1.02% in Q2 FY27 from 2.32% in Q2 FY26, while net non-performing assets declined to 0.29% from 0.57%.

The presentation reports provision coverage ratio at 71.47%, and provision coverage ratio including technical write-offs at 95.31%. Credit cost for Q2 FY27 was 63 basis points, including a standard asset provision of 11 basis points.

The deck also provides an asset quality movement table (in rupees billions) across wholesale, credit cards and personal loans, joint liability group lending, and secured retail. It details additions during the period, upgrades, recoveries, and write-offs, offering a more granular view of the quarterly movement in non-performing assets.

Digital and ESG disclosures: operating metrics and formal targets

On digital banking, the presentation includes operational scale indicators. It reports a monthly average transaction volume of about 97 million in Q2, with mix across UPI, IMPS, and RTGS and NEFT. It also states 100% penetration of e-sign in the microfinance business and about 0.21 million files processed in Q2 through the e sign or stamp platform. In addition, it reports 19.9 thousand credit cards onboarded in Q2 via account aggregators integration.

On sustainability, the bank reported a CRISIL ESG score of 71, entering the CRISIL ESG leadership band. It stated that it initiated independent Business Responsibility and Sustainability Reporting core assurance starting FY 2025-26. It also disclosed climate risk management actions, including exposure thresholds for high-carbon sectors set in July 2023 and integration of climate physical risk assessment into underwriting effective 1 July 2026. The bank stated a voluntary target and plan to achieve carbon neutrality within its own operations and to phase out exposure to coal-based thermal power generation by FY 2034.

Takeaways from the quarter

RBL Bank’s Q2 FY27 presentation points to a quarter of higher profitability, improved efficiency, and better headline asset quality metrics, while the balance sheet expanded quickly on both deposits and advances. For investors, the same presentation also highlights monitorables that can shape the next phase of performance, particularly the lower average CASA ratio compared to last year and the decline in yield on advances, even as net interest margin improved during the quarter.