Yes Bank posts 81% drop in profit on jump in provisions

Private sector lender Yes Bank on Saturday announced 80.66% drop in its net profit for the quarter ended December 31 to Rs 51.5 crore owing to a significant 125% jump in provisions.

The increase in the provisions is on account of ageing related provisions for legacy accounts, Prashant Kumar, MD & CEO of the bank, said. The lender had made provisions of Rs 845 crore in Q3FY23.

Despite the drop in bottomline, the bank posted an increase of 25% year-on-year in its pre-provisioning operating profit (PPOP) to Rs 914 crore in Q3FY23.

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The non-interest income of the bank rose 56% year-on-year to Rs 1,143 crore which aided the growth in the bank’s operating profit.

The bank’s net interest income (NII) stood at Rs 1,971 crore in Q3FY23, higher by 12% year-on-year while its net interest margin (NIM) expanded by 10 basis points (bps) to 2.5% as of December 31.

The bank saw 10.4% year-on-year increase in its advances, lower than the industry average, to Rs 1.9 trillion. The growth in advances was led by retail and mid-corporate segment while large corporate book declined by 26% year-on-year.

Deposits grew by 16% year-on-year to Rs 2.1 trillion, with the CASA ratio contracting by 50 bps to 29.90% as of December 31.

The bank had given a guidance of 35% CASA ratio by FY23 end but it might revise its target given the compeptition among lenders for raising deposits.

The bank’s gross non-performing asset (NPA) ratio declined substantially by 1,263 bps year-on-year to 2.02%. Sequentially, gross NPA ratio fell by 1,090 bps.

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Net NPA ratio fell by 426 bps year-on-year and 257 bps quarter-on-quarter to 1.03% as of December 31.

The bank completed the transfer of bad loans to JC Flowers Asset Reconstruction Company during the quarter.

The bank saw net loans to the tune of Rs 1,091 crore slipping into NPAs and made total recoveries of Rs 1,270 crore.

The lender has set a target of Rs 5,000 crore in recoveries in FY23 and is likely to exceed its aim as it has done recoveries of up to Rs 4,300 crore so far in FY23, as it is targeting recoveries of Rs 1,000 crore.