1. Yes Bank plans $1bn share sale

Yes Bank plans $1bn share sale

Yes Bank, the country’s fifth-biggest private sector lender by assets...

By: and | Published: April 23, 2015 12:16 AM

Yes Bank, the country’s fifth-biggest private sector lender by assets, on Wednesday said its board has approved a plan to raise up to $1 billion by selling stock in local or overseas markets to shore up its capital base.

The bank needs nod from shareholders and regulators before it goes ahead with the sale, CFO Rajat Monga told reporters. He did not give a timeline for the sale. In a separate stock exchange filing, Yes Bank said the sale could happen in one or more tranches.

The bank posted a 28.1% growth in profit after tax in the quarter ended March 31, 2015, at R551 crore from the corresponding period in 2014. For the full fiscal, profit rose 24% to R2,005.40 crore. “The profit growth has been led by the growth in non-interest income and the net interest income of the bank,” said Monga.

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Net interest income grew 35.8% y-o-y to R977.10 crore, while also seeing a 28.4% growth in FY15. Net interest margins rose 0.2% to 3.2% on a y-o-y basis, while it remained flat compared to the previous quarter. Non-interest income saw a y-o-y growth of 32.5% at R590.4 crore. The bank declared a total income of R1,567.50 crore against R1,165.10 crore in the fourth quarter of FY14, a growth of 34.54%. Operating profit rose 37.79% to R937.50 crore on a y-o-y basis.

Gross NPAs, as a proportion of gross assets, was at 0.41% as on March 31 this year, 0.1% higher than the corresponding period in 2014. Net NPAs, as a proportion of net assets, was at 0.12%, 0.07% higher on a y-o-y basis. On a q-o-q basis, gross NPAs came down by 1 bp, while net NPAs rose 2 bps.

“Fifty basis points of the bank’s loan book now stands restructured. This change is largely due to a single account, which was restructured due to a delay in the commencement of the commercial operations of the project,” Monga said.

Total provisions for the fourth quarter stood at R126.40 crore against R72.30 crore on a y-o-y basis. The y-o-y increase in provision is driven by a step-up in the excess standard provision to the extent of v50.7 crore in Q4FY15, the bank said. Tier-I capital stood at 11.5%, while the bank maintained a liquidity coverage ratio of 80.3%.

Capital raised will largely be used to drive growth plans: Rajat Monga, Yes Bank

Yes Bank has posted reasonably good numbers for the fourth quarter of FY15. Rajat Monga, chief financial officer, talks about the bank’s fundraising plans, among other things. Excerpts:

You’ve said there is one account from which a major chunk of restructuring has come. Which sector is that from?

A major part of restructuring has come from a single account, which was restructured due to a delay in commencement of commercial operations of the project. The restructured account is from the roads sector. This project continues to be in the eligible restructured category.

What are your international expansion plans?

We are about to launch our first international representative office in Abu Dhabi in the United Arab Emirates. Our focus lies on setting up an IFSC banking unit (IBU) in the GIFT city. Our board has approved setting up an IBU in the GIFT city, subject to regulatory approvals. It is as good as an international branch of a bank where the lending won’t happen in rupee, but will be dollarised.

Would you use the capital raised to fund any possible acquisition?

I would say that the capital that we raise will be substantially used for growth. If there is an acquisition along the way, it would not be capital-intensive. The new capital will be used largely for funding our growth, which we believe we can deliver.

What about fund raising through bonds?

We raised about R1,000 crore through green bonds between February and March this year. We have also planned to raise more funds through the infrastructure bond category. There will be both green and non-green bonds in that category.

Maybe, as soon as the first quarter of this fiscal, we may launch an issue. We also have board approval, subject to shareholder approval, to raise R10,000 crore through bonds, which would either be infrastructure or tier-I or tier-II bonds.

Could you quantify your exposure to steel, power and roads sectors?

We have about 3.2% of our total loan book exposure to the steel sector. Out of this, more than two-thirds is exposed to ‘AA+’ or better rated companies. In the power sector, we have about 1.7% exposure of our total loan book.

And, I think, possibly 80% of this exposure is towards renewable energy — wind and solar energy projects that we finance. We have one single small exposure to thermal project finance which is about 15 to 20 basis points of our loan book. Talking about the roads sector, we have about 1.3% of the bank’s loan book exposure to this sector.

Is there any possibility a base rate cut in the near term?

Base rate cuts are largely driven by time deposit costs. There will be a base rate cut, but there is nothing as of now that I can confirm.

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