Why Did RBL Bank Share Price Jump 7% Despite an 80% Drop in Q4 Net Profit?
When RBL Bank announced its Q4FY25 results, the headline numbers painted a gloomy picture — an over 80% drop in consolidated net profit. However, in an interesting turn of events, the bank’s share price spiked by 7% during Monday's trading session, reaching a high of ₹201.25 per share.
At first glance, it might seem surprising. But when you dig deeper, there are solid reasons why investors showed confidence in RBL Bank despite the weak profit numbers.
Key Reasons Behind the Surge
1. Results In Line With Expectations
Even though the net profit took a major hit, the overall performance was broadly in line with what analysts had anticipated. Centrum Broking noted that RBL Bank's results matched expectations. A strong showing in non-interest income helped offset the impact of elevated credit costs — an issue that had been recurring.
2. Improvement in Asset Quality
There were clear early signs of asset quality improvement. Gross slippages dropped by 130 basis points quarter-on-quarter, which is a strong positive. Moreover, the Special Mention Account (SMA) pool for the Joint Liability Group (JLG) book reduced significantly, from ₹5.5 billion to ₹3.8 billion.
Better asset quality always boosts investor sentiment, and RBL Bank showed encouraging signs in this area.
3. Strengthening Provision Coverage Ratio (PCR)
The bank increased its Provision Coverage Ratio (PCR) by a sharp 700 basis points quarter-on-quarter, now standing at an impressive 89%. This was achieved through the utilization of contingent provisions worth ₹2.73 billion, showcasing RBL Bank’s proactive approach to risk management.
4. Positive Management Commentary for Future Growth
Management’s outlook was another major factor. They indicated that the worst phase of the credit cost cycle seems to be over. Looking ahead, FY26 is expected to be significantly better in terms of both growth and profitability.
Such positive forward-looking commentary tends to reassure investors that short-term struggles are being managed effectively.
Conclusion
Despite the steep decline in Q4 net profit, RBL Bank’s fundamentals showed signs of stability and recovery. The share price rally reflects investor belief that the worst is behind the bank and better days lie ahead. With asset quality improvements, stronger provisions, and a hopeful management tone for FY26, RBL Bank managed to turn a potentially negative narrative into a positive one.
Reference from:-https://www.livemint.com/market/stock-market-news/why-did-rbl-bank-share-price-jump-7-despite-an-80-drop-in-q4-net-profit-key-reasons-explained-11745813063578.html