Analysts Revise RBL’s Loan Forecasts Following Bajaj Finance Exit and Rising NPLs

In December 2024, Indian private-sector bank RBL (NSE: RBLBANK) and leading financial services company Bajaj Finance (NSE: BAJFINANCE) mutually decided to discontinue fresh issuance of their co-branded credit cards, marking the end of an eight-year collaboration. The decision comes as RBL grapples with mounting pressures on asset quality and capital adequacy.

The credit card business has been key to RBL’s retail lending portfolio, and the partnership’s termination has prompted analysts to cut their forecasts for the bank’s total consumer loans in the upcoming third quarter earnings to ₹557 billion. This marks a -3.6% decline from projections made before the announcement and a -4.8% drop compared to pre-second-quarter expectations.

Adding to RBL’s challenges, rising gross non-performing loans (NPLs) are likely to weigh on its commercial loan book. This is mainly due to RBL’s significant exposure to the high-risk microfinance sector, which has seen a notable rise in delinquencies over the past year. Analysts anticipate subdued growth in commercial lending alongside higher gross NPLs when the bank reports its Q3 FY2025 earnings on Saturday, January 18, 2025.