RBL Bank shares tumble 14% on disappointing Q2 results; here is what the MD and CEO said 

The private sector lender had reported a post-tax net profit of ₹294 crore in the year-ago period and ₹372 crore in the preceding June quarter.

RBL Bank Chief Executive and Managing Director R Subramaniakumar told reporters that the stress in the microfinance book is due to industry-wide issues, but the same on the credit-card front, where the regulator has been flagging risks for the industry, is on account of internal aspects.

A senior bank official said the lender expects the challenges on credit cards that are arising out of a transition, to take loan collections in-house from being outsourced to a partner earlier, will settle by the end of the third quarter, but the same on microlending may persist longer.

The fresh slippages nearly doubled to ₹1,026 crore during the quarter, and nearly 70% of the additions came from the credit card book, while the rest were from microfinance, an official explained.

The lender's operating profit grew 28% YoY to ₹1,769 crore, while its net interest income (NII) grew 14% YoY to ₹3,315 crore. Net interest margin (NIM) slipped to 5.04% from 5.54% a year ago and from 5.67% in June 2024.

Net interest margin (NIM) is one of the key metrics to assess a financial entity's health. It represents the difference in the interest incomes generated by banks and financial institutions between their lending activities and how much they spend on paying out interest to their depositors. NIM shows the profitability with which a bank uses its assets and liabilities to make money. A NIM will be higher for a profitable bank.