RBL Bank has outlined its strategic expectations for net interest margin improvement despite anticipated monetary policy changes. The bank's management has expressed confidence in achieving marginal gains in profitability metrics through tactical adjustments in its asset-liability management approach.

Net Interest Margin Outlook

The bank expects to achieve a slight improvement in its net interest margin despite the December 2025 repo rate cut. This positive outlook is underpinned by two key strategic initiatives that the bank believes will offset the impact of the anticipated rate reduction.

RBL Bank's approach focuses on optimizing both sides of its balance sheet to maintain profitability. The institution has identified specific areas where it can enhance margins through better pricing mechanisms and strategic asset allocation.

Strategic Initiatives for Margin Enhancement

The bank's margin improvement strategy centers on two primary areas:

The bank's management believes that better term deposit pricing will help manage funding costs more effectively. Simultaneously, the institution plans to increase its exposure to loans in high-yield assets, which should contribute to overall margin expansion.

Credit Card Portfolio Challenges

While the bank maintains an optimistic outlook on margins, it acknowledges ongoing challenges in its credit card business. The institution expects credit card delinquencies to remain elevated for an extended period.

The bank's assessment indicates that normalization in the credit card segment will be gradual:

• Delinquencies expected to stay high for two more quarters
• Normalization timeline projected by September
• Ongoing monitoring of portfolio performance

Market Positioning Strategy

RBL Bank's approach reflects a balanced strategy of managing both opportunities and challenges in the current banking environment. The institution's focus on high-yield assets demonstrates its commitment to maintaining profitability while navigating sector-wide pressures.

The bank's strategic positioning involves careful balance sheet management to optimize returns while addressing asset quality concerns in specific segments. This approach indicates the institution's focus on sustainable growth and risk management.

RBL Bank has delivered exceptional financial results for Q3FY26, showcasing remarkable profitability growth and improved asset quality metrics. The private sector lender's performance reflects strong operational efficiency amid ongoing business transformation.

Outstanding Financial Performance

The bank's financial metrics for Q3FY26 demonstrate exceptional growth across key parameters:

The standout performance was the bank's net profit, which surged dramatically from ₹33 crore in Q3FY25 to ₹214 crore in Q3FY26, representing a substantial 555% year-on-year growth. On a quarter-on-quarter basis, the lender reported a 20% increase in profitability.

Revenue Growth and Margin Dynamics

RBL Bank's interest income showed steady growth, reaching ₹1,657 crore in Q3FY26 compared to ₹1,585 crore in the same quarter last year. This 5% year-on-year increase reflects the bank's ability to maintain lending growth despite competitive market conditions. However, the net interest margin compressed to 4.63% from 4.90% in the previous year, indicating pressure on spreads.

Asset Quality Shows Improvement

The bank demonstrated significant improvement in asset quality metrics during the quarter:

Gross Non-Performing Assets declined notably to 1.88% as of December 31, 2025, from 2.32% at the end of September 2025. Net Non-Performing Assets also improved marginally to 0.55% from 0.57% over the same period. The provision coverage ratio, including technical write-offs, stood at a healthy 93.20%.

Analyst Outlook and Recommendations

Despite some challenges, analysts maintain a positive outlook on RBL Bank:

Motilal Oswal has maintained a Buy rating with a target price of ₹370, citing better-than-expected pre-provision operating profit supported by strong other income. The brokerage expects wholesale advances to grow 20-25% year-on-year and retail advances at 25-30%. Elara Capital retained an Accumulate rating while raising its target price to ₹345, noting that RBL Bank appears to be at an inflection point with early signs of stability across key operating metrics.

Market Performance and Future Prospects

RBL Bank shares have risen 25% in the last 6 months, reflecting investor confidence in the bank's turnaround story. The proposed capital infusion from Emirates NBD and the bank's aggressive provisioning strategy are expected to support improved credit growth and asset quality over time. Management has guided for healthy business expansion ahead, with plans to scale the unsecured portfolio at a calibrated pace while maintaining a comfortable credit-deposit ratio.