RBL Bank (RATB.BO): NIMs Plunge, Card Stress Elevated; Recovery on the Horizon

Research evidence excerpt

RBL Bank (RATB.BO): NIMs Plunge, Card Stress Elevated; Recovery on the Horizon

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19 Jul 2026 17:26:15 ET │ 19 pages

RBL Bank (RATB.BO)

NIMs Plunge, Card Stress Elevated; Recovery on the Horizon

CITI'S TAKE

As anticipated, NIMs plunged 28bps QoQ to 4.13% (pressured by repo

repricing, interest reversals on card stress, and high-cost savings product)

and credit card stress remained elevated at 11-12%. Nonetheless, RoA Buy

nudged up marginally QoQ to 0.57% (vs CitiE of <0.4%) aided by sharp cut Price (17 Jul 26 15:30) Rs367.75

in opex (down 8% YoY/5% QoQ) and subsiding stress in non-card portfolio

(credit cost at 2.1% vs CitiE of 2.3%). Recovery on the horizon: i) NIMs to Target price Rs440.00↑

rebound from Q2, supported by equity deployment/replacement of high- from Rs390.00

cost liabilities; ii) Credit card slippages and associated costs to reduce Expected share price return 19.6%materially from Q3 onwards. Factoring recent ENBD infusion (on June 18th)

coupled with improved credit cost trajectory and lower tax-rate, we revise Expected dividend yield 1.1%

earnings upwards by 7-10% for FY27E/FY28E (introduce FY29E) expecting Expected total return 20.8%

it to deliver 0.8%/1.1% RoA for FY27E/FY28-29E. With better growth Market Cap Rs569,482Mvisibility, we revise TP to Rs440 assigning 1.5x Sep’27 book (earlier Rs390

at 2.3x book). Maintain Buy. US$6,037M

NIMs compress on multiple headwinds; Q2 inflection expected — NIMs plunged

28 bps QoQ to 4.13%, the primary drag coming from three concurrent factors: full- Buy

quarter impact of repo rate cut, accrual reversals from elevated card slippages, and

a high-cost savings product introduced in late March (has now been discontinued). Price (17 Jul 26 15:30) Rs367.75