RBL Bank is targeting to expand its net interest margin (NIM) to over 5.2 per cent by the end of FY24 by upping the share of higher-yielding assets in its loan book, a top official has said.The private sector lender will continue to maintain the share of unsecured loans like credit cards and microfinance by growing them at over the 20 per cent overall loan book increase targeted for every year till FY26, R Subramaniakumar told PTI.
The bank had reported an expansion in NIMs to over 5 per cent in the March quarter, in line with the industry trend.
“NIM will be 5.2-5.3 per cent by the end of the year (FY24). The mix of products will deliver the higher yield,” he said.
Subramaniakumar said the bank is targeting to increase the share of secured retail assets like mortgage loans, loans against property, two and four-wheeler loans, which will yield higher.
He admitted that given its relatively smaller size, it has to offer higher deposit rates to get the required liabilities to fund the asset growth of over 20 per cent.
The higher deposit rates alone will have a 0.30 per cent drag on the NIMs, he said, adding that the same will be compensated by replacing the asset profile.
At present, it does not have many contributions from secured assets in the retail loans, which yield less as compared to unsecured ones but are generally safer bets having lower risk weights, he said, adding that the secured retail assets yield higher than wholesale book.
By end-FY26, the bank is targeting to have a third of its book from such secured retail assets, Subramaniakumar said, adding that it will continue to grow the unsecured book as well which it considers as “flagship” products.
It can be noted that in late 2021, the Reserve Bank had, in a rare intervention, curtailed the duration of the then MD and CEO, and also placed its representative on the bank board. As per some reports, the regulator was concerned with the unsecured assets concentration at the bank.