Private sector lender Yes Bank on Saturday reported a 32% decline year-on-year in its net profit for the quarter ended September 30 to Rs 153 crore on account of a significant increase in provisioning. The lender made provisions of Rs 583 crore, higher by 55% y-o-y as the bank made provisions for two large accounts.
At the operational level, the bank’s pre-provisioning operating profit (PPOP) by 17% y-o-y to Rs 790 crore led by non-interest income, which grew by 18% on account of rise in retail and corporate banking fees.
The bank saw an expansion of 4 basis points (bps) in its net interest margin (NIM) to 2.6% as of September 30. The lender does not expect any compression in NIM going, Prashant Kumar, managing director and CEO of the bank, said in a post-earnings conference call. Net interest income (NII) also saw a 32% y-o-y rise during Q2FY23 to Rs 1,991 crore on account of growth in advances.
However, the lender saw lower-than-industry average growth rate in loans at 11% y-o-y to Rs 1.92 trillion. The share of retail loans increased to 41% during the quarter from 38% a quarter ago. The bank’s corporate book fell 18% y-o-y to Rs 65,442 crore while mid-corporate portfolio improved 34% y-o-y to Rs 23,121 crore.
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On deposits side, the bank’s total deposit base grew 13% y-o-y, at an higher than industry average rate to Rs 2 trillion. Current account, savings account (CASA) ratio increased to 31% as of September 30 from 29.4% a year ago. However, deposit moblisation is likely to be a challenge over the next six months as customers are moving balances from savings account to fixed deposits because of better rate of interest, Kumar said. The bank has so far garnered deposits to the tune of Rs 1,000 crore through the floating rate fixed deposit scheme, it had started earlier, he said.
The bank is close to completing the transfer of stressed assets to JC Flowers ARC and the deal is likely to close in Q3FY23. The lender has accepted the JC Flowers’ bid of Rs 11,183 crore and acquisition of 20% stake in the ARC. Although 85% of the transferred stressed assets will be in the investment book of the bank through security receipts, it will have to make ageing provisions for the same, Kumar said.
Gross non-performing asset (NPA) ratio stood at 12.9% as of September 30 compared to 15% a year ago and 13.4% q-o-q while net NPA ratio was at 3.6% as against 5.5% y-o-y and 4.2% sequentially. The bank saw slippages at Rs 896 crore lower than Rs 1,783 crore a year ago.
The bank’s total capital adequacy ratio stood at 17.3% as of September 30 as against 17.6% a year ago.