YES Bank Q1 net rises 28%

Net interest income, the difference between interests earned and expended, grew 42.2% to Rs 1,059 cr

Private sector lender YES Bank posted a 27.7 per cent rise in net profit for the quarter ended June, thanks to a strong growth in net interest income and other income. Net profit inched up to Rs 551 crore for the quarter compared to Rs 431 crore in the corresponding quarter last year.

Net interest income, the difference between interests earned and expended, grew 42.2 per cent to Rs 1,059 crore. Other income, which accounts for fee from transaction banking, wealth advisory, derivatives, etc, increased 31.8 per cent year-on-year to Rs 545 crore in the quarter ended June.

Net Interest Margin (NIM) for the quarter improved to 3.3 per cent, compared to three per cent in the June quarter a year ago. The margin expansion was led by an improvement in the share of current and savings accounts (Casa), which improved to 23.4 per cent from 22.3 per cent a year ago.

Deposits grew 25.2 per cent to Rs 95,315 crore, whereas advances grew 35.1 per cent to Rs 79,665 crore, led by increase in lending to individuals and the small and medium enterprise sector.

Gross non-performing assets (NPA) saw a slight increase and stood at 0.46 per cent compared to 0.33 per cent in the same quarter of FY15. Net NPA was 0.13 per cent as compared to 0.07 per cent as on June 30, 2014. Gross and net NPA in the January-March quarter of FY15 were 0.41 per cent and 0.12 per cent, respectively.

“There were no slippages from restructured to NPA. There were two accounts from the road sector that were restructured due to operational delay,” said Rajat Monga, chief financial officer of YES Bank.

Total restructured advances stood at Rs 567.1 crore in the quarter which accounted for 0.71 per cent of the gross advances, said the bank. There has been no sale to asset reconstruction companies, he added.

With the increase in NPA, provisioning also increased to Rs 98 crore in the quarter compared to Rs 23.7 crore in the same quarter last financial year.

“We had guided (expected) for FY16 credit costs of 60-80 bps (basis points) in April but have done better with credit costs at 40 bps. We are lowering this guidance to 50-70 bps in FY16. We believe our NPA formation in FY16 will be similar to that in FY15. We expect our NIM to be flattish to marginally improving for the rest of the financial year,” said Jaideep Iyer, group president-financial management, YES Bank.

The capital adequacy ratio stood at 15 per cent. The bank is planning to raise Rs 700-800 crore in the second quarter. The lender also has plans to raise $1 billion via American depository receipts or qualified institutions placement this financial year.

The bank had been planning to enter in the mutual fund business and is still evaluating it. “We can either acquire an existing company or start one on our own. To start, we have the board approval and the rest of the approvals are in an application stage,” said Monga.