Shares of RBL Bank slipped nearly 7% in Monday’s trading session, despite the bank reporting a strong set of Q3 FY26 earnings marked by a multifold jump in net profit and improvement in asset quality. The stock reaction appears to be driven largely by the impact of a sharp rise in credit costs, which increased around 40 basis points sequentially.
Strong Q3 FY26 earnings, but expectations already priced in
RBL Bank reported a net profit of Rs 213 crore in Q3 FY26, a sharp jump from Rs 32 crore in the same quarter last year. The surge in profit was primarily aided by a 46% decline in provisions, even as the quarter included one-time expenses of Rs 32 crore linked to changes under the new labour codes.
Net interest income rose 4.6% year-on-year to Rs 1,657 crore, compared with Rs 1,584 crore in Q3 FY25. Interest income grew 3.7% YoY, while interest expenses increased 2.9% YoY, keeping core earnings growth steady but in the low single digits.
Asset quality improves, advances and deposits grow
The bank’s asset quality improved meaningfully during the quarter. Gross non-performing assets declined to 1.8% from 2.9% a year ago, while net NPAs stood at 0.55%.
Gross advances rose 13% year-on-year to Rs 1,04,502 crore, supported by 10% YoY growth in retail advances to Rs 60,611 crore and 21% YoY growth in wholesale advances to Rs 42,475 crore. The retail-to-wholesale mix stood at 59:41.
On the liability side, total deposits increased 12% YoY to Rs 1,19,721 crore, while CASA deposits grew 6% YoY to Rs 36,972 crore. However, the CASA ratio slipped to 30.9%, compared with 32.8% in Q3 FY25, which likely weighed on sentiment.
Credit cost rises 40 bps QoQ, dents profitability
Despite the strong year-on-year jump in net profit, RBL Bank’s quarterly performance was impacted by a sharp rise in credit costs, which increased around 40 basis points sequentially. The higher credit cost was driven by elevated provisioning during the quarter, including precautionary buffers and stress recognition in select loan segments.
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