YES Bank Q3 net up 30% at Rs 540 crore

High net interest income and margin expansion fuelled growth, advances up 32%; raised Rs 7,500 cr of capital so far this financial year

Private sector lender YES Bank has reported a 30 per cent rise in net profit to Rs 540 crore for the quarter ended December, 2014, aided by growth in net interest income (NII) and net interest margin (NIM). The profit was Rs 416 crore in the year-ago period.

NII, the difference between interest income and expenditure, grew 36.6 per cent to Rs 909 crore, with a growth in advances. Other income – gains from treasury, distribution income, etc -- was up by 38 per cent to Rs 537 crore.

NIM was 3.2 per cent, against 2.9 per cent in the third quarter last year. The management said the cost of funds had come down by 20 basis points. Gross non-performing assets (NPAs) as a percentage of total loans was 0.42 per cent for the quarter against 0.39 per cent in the same period a year before.

The net NPA ratio was 0.10 per cent against 0.08 per cent in the corresponding quarter. Fresh additions to NPAs were a little less than Rs 70 crore.

“The asset quality outlook has got better and we believe the  worst is behind us. If GDP (gross domestic product) growth (for the year) picks up to 6.5 per cent or more, it will bring further relief,” said Jaideep Iyer, group president, financial management.

At a time when several lenders have been struggling with slowing credit growth, YES Bank’s advances grew 32.4 per cent to Rs 66,607 crore.

The management said growth was coming from both corporate and retail segments but the latter was growing faster. At the end of the quarter, the corporate segment accounted for 68.7 per cent and retail’s contribution to total advances was 31.3 per cent.

“Players that have witnessed tepid credit growth are the ones that have seen large corporate shifting to commercial paper, instead of going to banks for borrowing purposes. These are typically players that have a lower base rate. As we are not one of such players, we haven’t been struggling with credit growth,” said Rajat Monga, chief financial officer.

Deposits grew 21 per cent to Rs 82,370 crore. At end-December, the share of current and savings accounts (Casa) was 22.6 per cent of the total.

In this financial year, the bank has so far raised $500 million in equity through Qualified Institutional Placement, long-term funding of $422 mn through a Dual Currency Syndicated Facility and $200 mn from Asian Development Bank. This aggregates to about $1.2  billion (nearly Rs 7,500 crore).

It also plans to raise Rs 3,000 crore via infrastructure bonds. The bank is in the process of getting shareholder approval for this.  The capital adequacy ratio is 16.7 per cent, compared to 16.1 per cent at the same time last year.