India’s RBL Bank boosts focus on retail, from loans to deposits – CEO

MUMBAI, Nov 15 (Reuters) – RBL Bank of India (RATB.NS) wants to increase its retail exposure to prevent its books from being overexposed to big companies and to drive growth alongside its core credit card and microfinance businesses, said the private lender’s chief executive. The chief executive told Reuters on Tuesday.

RBL introduced new loan products such as motorcycle and automobile loans, gold loans and education loans to strengthen its focus on the retail and mid-market segments, while ditching other products such as loans for real estate. I adjusted and restarted. .

CEO R Subramaniakumar said in an interview, “All of these products offer yields of 9% to 14% and can diversify risk off the books of corporate and microfinance companies.

Subramaniakumar took over as CEO in June, six months after the Reserve Bank of India appointed additional directors to RBL’s board for no apparent reason. In the past, central banks have placed officials on bank boards to improve regulatory oversight when concerns arise.

In addition to revamping its loan products, RBL will also focus on cross-selling across its portfolio, the CEO said.

Banks are also working to improve their Return on Assets (RoA) and Return on Equity (RoE). Subramaniakumar expects that by the end of this year his RoA will be 1%, and in the next financial year he will rise to 1.5%, reaching around 1.7% by the end of FY25.

But some analysts are skeptical.

“Given the high cost of funds compared to the big banks and the fragmented bank history, we believe that we should create a niche in the lower yielding secured segment, sustaining RoA above 1% and RoE above 10%. Achieving this objectively will remain a challenge,” said brokerage firm Ambit. Capital said in a report last month.

But when asked about the report, Subramaniakumar was adamant.

“I stand by the quote. It might surprise you.”

deposit stability

RBL’s deposit growth was just 5% in the July-September quarter, while loan growth was 12.4%. As of October 21, industry deposit growth was around 10% and credit growth was 17.9%, according to RBI data.

Subramaniakumar said the bank is realigning its strategy by moving away from bulk deposits and focusing on low-cost savings and checking accounts.

“The idea is to increase the stability of deposits and reduce the volatility that arises from large deposits.”

RBL’s share price is down 30% over the past year, compared to a roughly 9% rise in the Nifty Bank index.

Subramaniakumar denied plans to buy back its own shares, saying the bank was well capitalized and would consider raising Tier 2 capital should the need arise.

Reported by Nupur Anand. Edited by Savio D’Souza

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