Q3 Result: YES Bank PAT rises 77% to Rs 266 cr on back of lower provisions

The private lender’s advances, however, grew at a tepid pace of 4% on a y-o-y basis.

Private sector lender YES Bank on Saturday reported a 77% year-on-year increase in its net profit at Rs 266 crore during the October-December (Q3 and 18% sequentially, primarily on the back of lower provisions. The private lender’s advances, however, grew at a tepid pace of 4% on a y-o-y basis.

For the quarter ended December, YES Bank’s gross advances stood at Rs 1.76 lakh crore, up mere 2% on quarter and 3.8% on year. Retail advances formed 57% of the bank’s loan portfolio while corporate loans accounted for the remaining 43%. The growth in advances is lower than industry average of 7.1% y-o-y and lower than the bank’s earlier guidance of over 15% on-year growth in advances for the current fiscal.

Speaking at the post earnings conference, YES Bank managing director and chief executive office Prashant Kumar said the lower credit growth was because of the bank’s strategy of “debulking” of the large corporate loan as well as ample system liquidity for corporates. Because of the same, the bank will deliver 10% y-o-y credit growth in the current fiscal, he said.

Owing to a muted growth in advances, YES Bank’s net interest income (NII) — difference between interest earned and interest expended — fell 31% on year to Rs 1,764 crore. On a sequential basis, the NII was higher 17%. Net interest margin (NIM), on the hand, stood at 2.4% in Q3, lower than 3.4% last year.

On the liabilities side, YES Bank reported a strong 26% on year growth with total deposits standing at Rs 1.84 lakh crore as on December-end. The low-cost current account and savings account ratio (CASA) also improved to 30.4% as on December-end from 29.4% last quarter.

Further, YES Bank’s Q3 bottom line was boosted majorly by a fall in provisions. For the quarter ended December, the lender’s total provisions fell 82% on a yearly basis and 0.7% on a quarterly basis to Rs 375 crore. The provision coverage ratio stood at 79.3% as on December-end.

The bank’s asset quality improved in the reporting quarter with gross non-performing asset ratio (GNPA) falling to 14.47% as on December end as against 15% and 15.4% as on September-end and corresponding period last year, respectively. The net NPA ratio, too, improved to 5.3% as on December 31 from 5.5% as on September-end. Fresh slippages during the reporting quarter were at Rs 978 crore, lower than Rs 1,783 crore in July-September.

“We expect asset quality to continue to improve in the coming times. The process to form the ARC (asset reconstruction company) and complete the transfer of negative stress book (NPAs) is on track and we expect to complete this exercise by March 2022 or latest in the fist quarter of the next financial year,” Kumar told reporters.

He added that the bank has shortlisted four potential foreign investors for investment in ARC and that all parties are presently engaged in the due diligence process following which bank will decide on the winning investor.

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