YES Bank net rises 18.8% on lower provisioning

During the March quarter, the bank cut its provisions to Rs 72.3 cr from Rs 97.5 cr in the year-ago period

Private sector lender YES Bank on Wednesday reported a net profit of Rs 430.2 crore for the quarter ended March, an annual rise of 18.8 per cent, primarily due to lower provisioning and steady growth in fee income.

Net interest income, or the difference between interest income and interest expenditure, was Rs 719.6 crore, up 12.8 per cent compared to the year-ago period. The bank’s net interest margin (NIM) improved 10 basis points sequentially to three per cent; on an annual basis, it remained unchanged. Non-interest income grew 17.4 per cent year-on-year, driven by a rise in fee income.

“While last year was challenging, the bank has been able to preserve its asset quality, and its balance sheet has had decent opportunity to consolidate through the last couple of years,” said Rajat Monga, chief financial officer and senior group president (financial markets). He added the bank would aim for an NIM of 3-3.15 per cent through the next year.

During the March quarter, the bank cut its provisions to Rs 72.3 crore from Rs 97.5 crore in the year-ago period. At 0.31 per cent, its gross non-performing asset (NPA) ratio fell by 11 basis points on an annual basis, but improved by 18 basis points on a sequential one. Net NPA ratio was 0.05 per cent, while provisioning coverage ratio was 85.1 per cent.

YES Bank didn’t restructure any loan during the March quarter. As of March-end, its restructuring book stood at Rs 100.9 crore, 0.18 per cent of its gross advances. “We have not seen any increase in restructured assets for more than a year...There is nothing worrying on the asset quality front,” said Jaideep Iyer, deputy chief financial officer.

“The ability to maintain margins and control over operating expenses and asset quality are its key strengths. Diversification of balance sheet, with the mix moving towards granular retail and small business is essential for a stock re-rating,” Motilal Oswal Securities said in a report.