Citi has maintained a ‘Buy’ recommendation on RBL Bank. The brokerage has raised its price target to ₹285 from ₹230 earlier, implies a potential upside of 19% from Friday’s closing levels.
The foreign brokerage wrote in its note that it expects RBL Bank’s return on assets (RoA) trajectory to improve by 45-50 basis points driven by much awaited normalisation of credit cost.
Here are the key triggers listed by Citi:
1) Stress in Joint Liability Group (JLG) and credit card to further subside in Q1. Slippages are expected to moderate to 4.5% from 4.7% in Q4. The bank had already made accelerated provisions in Q4, 100% on gross non-performing assets (GNPAs) in the JLG segment and 75% on special mention accounts (SMA), which, along with adequate provisioning in the credit card portfolio, is likely to bring credit costs down to 2.2%.
2) Repricing of the floating-rate loan portfolio and a shift in the loan mix towards secured segments may lead to a 28-30 basis points decline in NIMs. However, Citi believes RBL’s NIMs will bottom out earlier than its peers, likely in Q1.
3) For the overall industry, Citi expects loan growth of 9% year-on-year and 2% quarter-on-quarter, led by commercial banking, business loans, and home loans. Deposit growth is projected at 10% year-on-year and 1% quarter-on-quarter.
RBL Bank shares settled 0.55% higher at ₹238.71 on Friday. The stock has climbed over 50% so far in 2025.
