ICICI Securities has increased its price target for RBL Bank to ₹430, noting strong 23% loan growth despite short-term profit pressure. Investors are monitoring the bank’s efforts to improve margins and manage credit card stress by the second half of the year.
ICICI Securities has updated its outlook on RBL Bank, raising the target price to ₹430 from its previous target of ₹390. This adjustment follows the bank's recent quarterly performance, which presented a mixed picture for shareholders. While the bank continues to show strong momentum in its loan book, rising costs and changes in its deposit base remain points of focus for market watchers.
In the quarter ending June 2026, RBL Bank reported a Profit After Tax of ₹250 crore. The bank achieved a 23% increase in total loans compared to the same period last year. This growth was driven primarily by the wholesale segment, which expanded by 38% year-on-year, and secured retail loans, which grew by 18%. In contrast, the unsecured retail loan portfolio saw more moderate growth of 8%.
Margin and Deposit Challenges
The bank’s profit margins faced pressure during the quarter, with Net Interest Margins—a key measure of the difference between interest earned on loans and interest paid on deposits—contracting by 28 basis points compared to the previous quarter. This decline is part of a broader trend, with margins having fallen by about 50 basis points since the quarter ending December 2025. Additionally, the bank’s total deposits saw a 10% decline sequentially, largely because management opted to let certain wholesale deposits mature rather than renewing them at higher costs.
This shift in the deposit mix, combined with a 20% sequential drop in CASA deposits—the low-cost current and savings account funds—contributed to a 17 basis point increase in the bank's cost of funds. Investors are watching these metrics closely, as lower-cost deposits are essential for maintaining stable profitability in the banking sector.
Outlook on Credit Quality and Growth
Looking ahead, the bank expects a recovery in its margins in the coming quarters, targeting a rebound of 30 to 40 basis points. A critical area for investors to monitor will be the bank's credit card business. Management has indicated that they expect to see a material improvement in credit card-related stress by the second half of the current fiscal year. The ability of the bank to successfully navigate this transition while maintaining its loan growth will be key to its performance.
Investors may continue to track management commentary regarding deposit mobilization and credit quality, as these factors will influence whether the bank can meet its margin recovery targets and sustain its growth trajectory in the competitive mid-to-small private banking space.