YES Bank reported a 55% year-on-year (YoY) growth in net profit for the December quarter, driven by lower provisions. The bank’s net profit was at Rs 951.62 crore, higher than Bloomberg estimates of Rs 782 crore. Provisions fell 91.5% YoY to Rs 22 crore from Rs 259 crore, aiding the lender’s bottomline. However, the bank’s interest income was down 3.6% to Rs 7,543 crore during the period.
Margin Resilience
The lender was able to bring down its total expenditure despite incurring cost of Rs 155 crore from new labour codes. The total expenses stood at Rs 7,942 crore during the December quarter, down 3.9% on year.
“Our reported net profit for Q3 had an one-time impact of Rs 155 crore due to the incremental provision on account of changes in the labour codes. Adjusting for this impact, net profit after tax is Rs 1,068 crores, translating to an annualised ROA (return on assets) of 1%,” Prashant Kumar, MD & CEO, said in the post-earnings media conference.
The net interest margin (NIM) of the bank rose to 2.6% from 2.5% in the previous quarter. The bank said it would be able to protect the margins at the current level despite the latest 25-bps rate cut. Net interest income (NII) – difference between the interest earned and interest spent – grew 11% YoY to Rs 2,466 crore.
Also, the net advances grew 5.2% YoY to Rs 2.57 lakh crore as on December 31 driven by segments such as commercial banking, large corporates and credit cards. On the other hand, deposits rose 5.5% to Rs 2.93 lakh crore as on December 31.
“We have stayed cautious, targeting only profitable loan growth. We expect loan growth of 8% YoY for the year, fully supported by similar deposit growth,” Kumar said.
Improving Asset Quality
The private lender’s asset quality has improved slightly during the quarter with gross non-performing asset (GNPA) ratio decreased to 1.5% from 1.6% a year ago and net non-performing asset ratio was down to 0.3% from 0.5%.