On 19 July 2025, RBL Bank [NSE: RBLBANK], a leading private sector financial institution, announced its performance for the first quarter of FY26. The bank faced challenges during the quarter, including a significant decline in net interest income and a slight deterioration in asset quality, which affected profitability. Despite this, the results exceeded market expectations to some extent.
The bank’s net profit dropped by 46.2% YoY, standing at ₹200 crore, down from ₹372 crore in the same quarter of the previous year. However, the reported profit was higher than analyst estimates, which predicted a figure of ₹159 crore.
Key Financial Highlights for Q1 FY26
RBL Bank’s net interest income (NII) for Q1 FY26 decreased by 13% YoY, amounting to ₹1,480.6 crore, falling short of the expected ₹1,521 crore. This marks a decline from the previous year’s ₹1,700 crore in the same quarter.
Despite the drop in net profit, the asset quality saw some deterioration compared to the previous quarter. Gross non-performing assets (GNPA) rose to 2.78%, up from 2.6% in Q4 FY25, while net non-performing assets (NNPA) increased to 0.45% from 0.29% in March 2025.
Operating and Asset Quality Performance
RBL Bank experienced a sharp drop in provisions, with provisions falling to ₹442.3 crore, down from ₹785.1 crore in Q4 FY25. This reduction in provisions signals the bank’s efforts to stabilise its asset base.
The cards portfolio faced significant challenges during the past year. The bank acknowledged these issues during its earnings call, though it remains hopeful for gradual improvement in asset quality in the coming quarters. The liabilities side of the balance sheet remained strong, showing consistent growth in deposits, which will help to further stabilise the bank’s portfolio over time.
Net Interest Margin (NIM) and Future Outlook
The bank faced challenges with repo-linked loan repricing, which had an immediate impact on net interest margins (NIM). However, the bank is confident in a reasonable improvement in NIMs from Q3 onwards as deposit repricing takes effect. The liquidity coverage ratio (LCR) is expected to remain in the 120–140 range in the coming quarters, reflecting the bank’s strong focus on liquidity management.
Stock Performance and Market Sentiment
Shares of RBL Bank closed 0.97% lower at ₹260.60 on 21 July 2025, reflecting investor caution following the quarterly results. Despite the immediate decline, the stock has seen strong performance over the past month, increasing by 17% in the last 30 days and 65% year-to-date. This performance highlights RBL Bank’s resilience in the market.
Conclusion
RBL Bank’s Q1 FY26 results reflect a challenging quarter, with lower interest income, a decline in profit, and deteriorating asset quality. However, the bank continues to focus on deposit growth, improving liquidity, and stabilising margins. As the bank addresses asset quality concerns and the NIM situation, it is expected to see gradual improvement in the coming quarters.
The positive strategic developments and strong stock performance show that investor confidence remains relatively high in RBL Bank’s ability to navigate through short-term challenges while positioning itself for long-term stability and growth.
