YES Bank net zooms 56.3%

Rides on healthy core income.

Strong core income growth, coupled with lower provisioning for bad loans, helped new generation lender YES Bank post a 56.3 per cent increase in net profit to Rs 156.4 crore for the quarter ended June 30.

Loan book growth was 107.2 per cent, which along with falling cost of funds helped net interest income grow 67.1 per cent during the period. Net interest margins were steady at 3.1 per cent. The cost of funds came down to 6.3 per cent from 8.1 per cent in the corresponding period last year, while yield on advances fell 2.4 per cent to 9.6 per cent.

Non-tax provisioning came down to Rs 12.56 crore from Rs 45.53 crore as asset quality improved with gross non-performing asset (NPA) falling to Rs 59.7 crore from Rs 61.4 crore and net NPA from Rs 30 crore to Rs 11 crore. The net NPA ratio stood at 0.04 per cent on end-June as compared with 0.24 per cent in the same period last year.

According Managing Director and Chief Executive Officer Rana Kapoor, the bank will focus on building a strong current account and savings account (Casa) base in the next few years. “We plan to increase Casa to 15 per cent of our total deposits by March 2012 and to 30 per cent by March 2015. If that can be achieved, we will be able to maintain a net interest margin of four per cent,” Kapoor said. As on June end, Casa of the bank was 10 per cent, with 75 per cent current account deposits.

Kapoor hopes the bank’s plan to scale up its branch presence will help it make a strong deposit franchise. YES Bank, which has 159 branches at present, plans to open around 100 more branches in the current financial year.

“As the bank is in an investment mode, our cost to income ratio will go up to 40-42 per cent from 38 per cent now,” Kapoor said. The bank will increase its headcount by 1,000 in 2010-11.

On Rabobank bringing down its stake to below 5 per cent, Kapoor said it was going to benefit the bank as shareholding in the bank by foreign entities had come down to 51 per cent from 58 per cent, giving it headroom for raising resources from overseas funds. Rabobank had sold 11.3 per cent in YES Bank to a clutch of investors. The majority of the stake was sold to domestic institutions like Life Insurance Corp of India and State Bank of India.

Kapoor said the bank’s board had approved setting up of a branch in Bahrain and a representative office in the United Arab Emirates. “These will help us raise foreign funds,” he said, adding the bank was yet to seek approval from the regulator on this issue.

The bank’s share closed marginally up on Wednesday at Rs 297.70, an increase of 0.13 per cent from its previous close.