Yes Bank today posted a 33 per cent rise in June quarter net profit at Rs 732 crore on higher non-interest income, even as bad loans spiked, and announced that it will enter asset management business early next fiscal.
Like peers HDFC Bank and Axis Bank, the mid-sized private lender of late has started feeling the heat on the asset quality front, with its gross non-performing assets jumping to 0.79 per cent, from 0.46 per cent.
Accordingly, its provisions more than doubled to Rs 206 crore, but CEO and MD Rana Kapoor said a bulk of it was due to loanbook growth.
Its slippages rose Rs 300 crore during the quarter and came from iron and steel, electricity and engineering, procurement and construction space.
Kapoor brushed aside concerns on asset quality, saying the net NPA ratio remains unchanged at 0.29 per cent.
The city-based bank's core net interest income rose 24.2 per cent to Rs 1,316.6 crore on a 33 per cent growth in advances and a jump in low-cost current and saving account deposits to Rs 29 per cent.
Non-interest income grew 65.2 per cent to Rs 900.5 crore, largely on a jump in treasury income at Rs 202 crore against Rs 116 crore a year ago and corporate banking fees surging to Rs 410 crore, from Rs 364 crore.
Net interest margin widened marginally to 3.4 per cent and Kapoor said it will grow to 4 per cent once the CASA ratio hits 40 per cent. The bank has advanced its 40 per cent CASA deposit target by 18 months to September 2018.
On its USD 1-billion capital-raising programme, Kapoor today said it will be a qualified institutional placement that will kick off before March 2017 and talks are already on with investors.
After recent approvals, the bank has 32 per cent headroom to increase foreign ownership, he said, adding that it also expects a rating upgrade in the next one year.
Cost to income ratio has moved down to 41.1 per cent. Kapoor said it is targeting to keep it at 39-42 per cent. Overall capital adequacy stands at 15.5 per cent, with core tier-I at 10.3 per cent.
Meanwhile, the bank said it has received markets regulator
Sebi's approval to start an asset management company and will be working on it for the next few months to enter the mutual fund space by early next fiscal.
Kapoor said the stress is on building business organically, but added that the bank is open to acquisitions that come along.
The bank will be launching a credit card next week which will complete its retail product suite. Kapoor said it will be launching seven variants of the card to target different categories.
The bank is witnessing surging demand from pharma, auto and renewable energy space, Kapoor said, adding that the international business unit at the GIFT City's loan book stands at USD 400 million at present that it looks to grow to USD 1 billion.
The bank scrip closed flat at Rs 1,200 on BSE as against a 0.17 per cent rise in the benchmark Sensex.
