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Today’s fall completely unexpected, we continue to grow and make profit: Vishwavir Ahuja, RBL Bank

Everything seems to be highly speculative and misplaced, says the CMD

ET Now|
Oct 01, 2019, 04.01 PM IST
Vishwavir Ahuja-RBL-1200
We are at 12.4% capital adequacy. We continue to grow and we continue to be profitable and I see no reason whatsoever for this kind of reaction to take place. Everything seems to be highly speculative and misplaced, says Vishwavir Ahuja, MD & CEO, RBL Bank. Excerpts from an interview with ETNOW.

Are you surprised by the way the market is treating RBL Bank stock today? It fell 22% before recovering. Is there any reason to worry for shareholders on the fundamental front?
What seems to be happening is completely unexpected. It seems to be highly speculative and misplaced, if I may put it that way. We gave a very honest indication a couple of months back post our last quarter results and frankly speaking there is no reason to believe that the situation is any worse than it was going to be. In fact, we continue to be growing and profitable and all of that will come out very soon in our result announcements which are a little over two weeks from now. I think we are profitable as a bank. We are growing as a bank, not just on an overall basis but even on a quarterly basis.

I cannot get into the details right now but fundamentally nothing has changed. I am surprised that week after week, there are news sflow which seems to be completely misplaced from the facts.

Has your book quality deteriorated between last quarter and right now? Are there any accounts where you were expecting recovery which has not happened? Are there any fresh slippages?
No, no. When we talked last, a couple of months ago, none of these things had actually happened and we had said that over the next two to three quarters, some of these things will play out and will therefore have some sort of an impact in terms of our asset quality, credit cost, etc. We gave an insightful guidance on that. We did not hedge that.

Frankly speaking, as of now, fundamentally nothing has changed between then and now. The situation has not worsened in any dramatic manner or anything like that to cause this sort of reaction. It is not that the number of accounts have increased or have become worse drastically.or We have a very adequate and comfortable capital ratio. We are at 12.4% capital adequacy. We continue to grow and we continue to be profitable and I see no reason whatsoever for this kind of reaction to take place. All I can say is every few days there is some news -- most of them are not true -- and even if one or two of them are true, these are not things that we have avoided. We have said that there were concerns over a handful of accounts. Everybody has an idea which these are. We cannot get into specifics for obvious reasons but from our operational perspective, things are very much under control and stable.

Are you aware of any particular funds or a cluster of funds or any FII which is selling your stock? We are talking about serious investor wealth which got eroded and your bank stock has fallen the most since the IPO?
Let us not talk since IPO, let us talk last two months or three months. It did extremely well for three years post the IPO and whatever has happened, has happened since the second week of July and that also post our own announcement of results and forward guidance of the few challenges that we said and which everybody has talked about. The entire industry is facing them and everybody is talking about it. If at all, there are hundreds of lists that float around in terms of bank NPAs and challenging accounts and I think we have the least, the least number of names that also…

That is absolutely fine and that is something that you have been very categorical about and also candid. But are you aware of any funds, any cartelisation which is shorting your stock in particular?
Obviously, if we were aware, then we would be much wiser for that reason. The fact of the matter is that one can only suspect that there is something possibly happening. But these are not in our realm of knowledge. Frankly we do not worry so much about those who play the stock or operate things. We are more concerned about making sure our institution is well managed. That is exactly what we are focussed on.

And if you smell something malicious here, would you be taking it up with the regulator?
Obviously this will make us huddle and review and see what other things we need to do to make sure that the message is clear to everybody that the bank is in good shape. It is well managed. It is strong. It is profitable. It is growing. And the few challenges that are there are faced in much greater measure by several other financial institutions in the country. If anything, we are much better than most and certainly within our capacity, we have got the capital. We have got the wherewithal to deal with it and we have got the absorption capacity for these little challenges that are there. It is not anywhere near being anything that should in any way disturb or derail our performance or growth journey of the bank. More than that, I cannot say.

Your capital adequacy is 10% plus which means the fear in the market is that okay RBL stock has gone down, will they be able to raise capital? But it looks like you are in a comfortable position and there is no immediate need for capital?
I had reported a couple of months ago that we do not have a need for capital but as a prudent bank we have always constantly periodically raised capital to remain comfortable and we have also stated that we have taken all the enabling resolutions to raise the next round of capital.

The point I am making is that while we may not immediately need capital because we are comfortable at the same time, I do not think there is an issue. We always go ahead of time in our capital raising initiatives and that would be the endeavour even now.

I am not ruling out a capital raise in the near term because that would be part of our normal prudent strategy to remain healthily capitalised and poised for continuous growth. That according to me is a slightly separate matter. Unfortunately, things are coming together that one thing leads to a question on the other.

At the beginning of the year you had a guidance;you changed your guidance, you explained to the market what is right what is wrong. Between your last shared guidance, has anything changed which will make you believe that you need to revisit your guidance again?
I will be very honest with you. I just made a comment a little earlier that nothing has materially changed from that point in time. Yes, the set of handful of names remains the same handful of names, there is no new negative surprise that has come up. That is as much as I can say.

Also you must appreciate that in little about two weeks from now, we are set to announce our results for the September 30th quarter, which ended yesterday and honestly that will be when we will make a more complete commentary with the elaboration and the details.

My point here is that there will be complete clarity from that point of view. The only statement I can make about the so-called proposed results is that we will be growing and we will be profitable and our journey of strengthening this bank from time to time will continue. There is no setback or anything that should be anticipated by the market from that point of view.

So, you are not completely denying that the guidance could be changed, are you?
No, no, it is not a question of denying. I just said three times over that I am not materially changing it at all and the details will be shared. Indeed, I am reassuring all investors that from that point of view, there is no material change at all and the fact of the matter is the very few names that we are dealing with, there is positive progress in some of them. At the same time, these things do not play out in 30 days or 60 days. The entire industry is sort of talking about it, reporting it and experiencing it. These things do not get suddenly worse and suddenly better in 15 days, 20 days, 30 days. They tend to play out over time and therefore we also said in our previous guidance that they will play out over six to nine months. I am not changing any of those statements.

It is not that you should expect something shocking in this quarter or the next quarter, no way. These things will play out. In some of those cases, we still do not have an NPA situation, maybe in one of them only.

There is a lot of rumour if I may say, there is a lot of speculation which is excessive and I am making that very clear.

Will your profit be under pressure because of the problematic account?
Obviously our profits will be lower but we will still be profitable. The fact of the matter is that if I have to take a higher provision, the profitability does get impacted and that is exactly what we guided earlier; we said our credit cost will go up, our NPAs will go up and we gave a very precise indication of that previously.

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