YES Bank Q2 net up 74% to Rs 225 cr on lower provisions, NII shrinks 23%

The lender will finalise partner ARC in 60 days, transfer NPA by March-end

Private lender YES Bank’s net profit was up 74.3 per cent to Rs 225 crore in the second quarter ended September 2021 (Q2FY22), on an uptick in non-interest income and a dip in provisions due to lower slippages.

It had posted a net profit of Rs 129 crore for Q2 Fy 21. Sequentially, it was up nine per cent from Rs 207 crore in June 2021 (Q1FY22).

Its net interest income (NII) shrank by 23.4 per cent in the reporting quarter at Rs 1,512 crore for Q2FY22. However,  NII rose sequentially by 7.9 per cent from Rs 1,402 crore in Q1FY22.

The net interest margin (NIM) dipped at 2.2 per cent year-on-year (YoY) in Q2FY22 from 3.1 per cent a year ago. However, NIM moved up sequentially from 2.1 per cent in June 2021 due to benefit from low-cost deposits, its managing director and chief executive Prashant Kumar said.

The lender's non-interest income expanded by 30.2 per cent to Rs 778 crore in September 2021 from Rs 597 crore a year ago. Sequentially, it shrank by 10.5 per cent from Rs 869 crore in June 2021 quarter.

Its stock closed lower by 4.12 per cent to Rs 13.73 per share on BSE.

Its provisions declined by 65 per cent to Rs 377 crore in Q2FY22 from Rs 1,078 crore in Q2FY21. Sequentially also, the provision fell by 17.4 per cent from Rs 457 crore in Q1FY22. The provisions declined as slippages in the quarter were low. With improvement in collection efficiency, the slippages will be less in coming quarters. Also the recoveries are expected to cross the target of Rs 5,000 crore for FY22, Kumar said.

The provision Coverage Ratio (including Technical Write-Offs) improved to 78.9 per cent in September 2021 from 79.7 per cent in September 2020. PCR was 79.3 per cent in June 2021.

Its asset quality profile showed improvement with Gross Non-Performing Assets (NPAs) ratio declining to 15 per cent in September 30, 2021 from 16.9 per cent a year ago. Sequentially also it was down from 15.6 per cent in June 2021.

However, Net NPA ratio moved up to 5.5 per cent in September 2021 from 4.7 per cent a year ago. However, Net NPAs fell from 5.8 per cent in June 2021.

About proposed Asset Reconstruction Company (ARC), Kumar said Bank will finalise and announce prospective joint venture partner in 60 days. It intends to transfer bad loans to this ARC by end of March 2022.

Its Advances grew at 3.5 per cent to Rs 172,839 crore in September 2021 as against Rs 1,66,923 crore in September 2020. Bank has given guidance for 15 per cent growth in credit for FY22.

The deposits were up 30.1 per cent to Rs 176,672 crore in September 2021 from Rs 1,35,815 crore in September 2020. The share The low-cost Current account and Savings account (CASA) in total deposits improved to 29.4 per cent in September from 24.8 per cent a year ago.

Its capital Adequacy ratio stood at 17.4 per cent as of end of September 2021. Bank expects to recoveries to enhance capital base in FY22 and have a relook at on capital raising plans by end of FY22 or early next year FY23.