YES Bank has reported a 32% y-o-y jump in its net profit for the first quarter of FY18 on the back of strong recoveries. In an interaction with reporters, MD and CEO Rana Kapoor said the bank has seen an improvement of stressed assets to 1.63% compared to 2.24%, and recovery is happening across the portfolio. Excerpts:
Is the recovery made during this quarter highest ever for your bank?
Yes, absolutely. This is distinctly the highest in any single quarter. As I mentioned in the last quarter, this was an expected recovery and it happened in the nick of time – the last week in June, and very much in tandem with our prediction. The spillover is Rs 102 crore, of which Rs 37 crore has come in, and approximately Rs 75 crore is due this quarter.
You said the momentum in recovery will continue. Apart from this account, where do you see significant scope for recovery?
If you see our gross NPA, the number is not very large — Rs 1,364 crore. If you see our security receipts, the overall number is Rs 997 crore and if you see our restructured account, it is about Rs 331 crore. But there is a strong focus by our risk management department that nothing should become dormant — every account should be collected. Therefore, you will see more and more traction. There is traction in all the stressed asset segments, and therefore as I said, we have seen an improvement of stressed assets to 1.63% compared to 2.24%, which is very good. Recovery is happening across the portfolio.
The corporate banking book is growing quite fast. Is that a conscious decision?
The objective of the bank remains undiluted. By March 2020, we want to have a corporate portfolio of approximately 60% and retail – consumer retail and MSME – we want to bring number up to 40%. Today the number stands at 32%. The MSME portfolio will grow steadily, but I don’t think it will overshoot targets this year. The consumer business is showing very good traction.
Where is the NPA divergence number reflecting in the results?
The net divergence in our bank’s case was Rs 1,040 crore. Out of that, one account was Rs 911 crore. We have had 60% recovery in this account. Another 12-15% recovery will happen in July and August. We are maintaining Rs 221 crore provision against it.
What is your outlook on the asset quality going forward?
We have proactively looked at the entire NPA situation. We don’t expect any major impact on our NPAs. For this year, our credit cost guidance remains unchanged at 50-70 bps.