RBL Bank Shares Soar 4% as Citi Opens 90-Day Positive Catalyst Watch, Raises Price Target

Shares of private sector lender RBL Bank surged 4% on June 30 after global brokerage firm Citi placed the stock on a 90-day positive catalyst watch, forecasting short-term upside potential.

While reiterating its ‘buy’ call on RBL Bank, Citi raised its price target for the stock by 24% to ₹285, predicting the scope for a potential upside of around 19% from the last closing price.

Looking ahead, the brokerage anticipates a marked improvement in RBL Bank’s return on assets (RoA), projecting a rise of 45–50 basis points. The RoA boost would largely be driven by a long-awaited easing of credit costs on the back of improving asset quality in key segments, Citi believes.

Meanwhile, Citi also expects stress in the Joint Liability Group (JLG) and credit card portfolios is likely to ease further in Q1. Slippages are projected to moderate to 4.5%, down from 4.7% in Q4. The bank had already taken a cautious approach in the previous quarter with accelerated provisioning of 100% of gross NPAs in the JLG book and 75% on special mention accounts (SMAs). Along with adequate buffers in the credit card segment, this is expected to reduce credit costs to around 2.2%.

While net interest margins (NIMs) are projected to soften by 28–30 basis points due to the repricing of floating-rate loans and a gradual shift towards more secured lending, Citi believes RBL’s NIMs will likely bottom out ahead of its peers, potentially as early as Q1.

Zooming out to the broader industry, Citi expects loan growth of 9% year-on-year and 2% sequentially, led by commercial banking, business loans, and home loans. Deposit growth is projected at 10% year-on-year and 1% quarter-on-quarter.

With improving fundamentals and proactive provisioning, Citi’s outlook suggests that RBL Bank could be poised for a period of stronger operational performance in the near term.