YES Bank Q1 profit rises 50.2% to Rs 311 cr on improved interest margins

YES Bank on Saturday reported a 50.2% year-on-year (YoY) increase in net profit to Rs 311 crore in the quarter ending June 30, 2022 (Q1FY23), driven by improved interest margins and lower provisions and contingencies.

The private sector lender had posted a net profit of Rs 207 crore in the same period last year (Q1FY22). Sequentially, its net profit declined by 15.5% from Rs 367 crore in Q4FY22.

Shares of the bank had closed up 2.94% at Rs 14.71 per share on BSE on Friday.

The lender’s net interest income (NII) increased by 32% in the first quarter of FY23 to reach Rs 1,850 crore from Rs 1,404 crore in the first quarter of FY22. Sequentially, the NII rose by 1.7% from Rs 1,819 crore in the quarter ended March 2022.

Its net interest margin (NIM) improved to 2.4% in Q1FY23 from 2.1% a year ago, but declined 2.5% in Q4FY22.

Other income fell 10.1% year on year to Rs 781 crore from Rs 869 crore in Q1FY22 and was down 11.4% from Rs 882 crore in Q4FY22.

Provisions fell by 61.8% to Rs 175 crore in Q1FY23 from Rs 457 crore in the prior year quarter. Sequentially, they were also down 35.5% from Rs 271 crore in Q4FY22.

The bank’s asset quality profile improved, with gross non-performing assets (GNPA) declining to 13.45% in Q1FY23 from 15.6% in Q1FY22 and 13.93% in Q4FY22.

Net NPAs fell to 4.17% at the end of Q1FY23 from 5.78% a year ago and sequentially down from 4.53% at the end of Q4FY22. The Provision Coverage Ratio (PCR) increased to 82.3% for the quarter under review, compared to 79.3% in the prior year and 81.5% in Q4FY22.

The bank has identified a portfolio of stressed loans totaling up to Rs 48,000 crore for sale to the Asset Reconstruction Company (ARC). It has already signed a pact with JCF LLC to form ARC which would acquire a pool of stressed loans. Loans that have slipped into the NPA category through September 2021 must be sold to CRA. For the pool of distressed loan balances, including foreign currency loans, the bank will take a call later to assign them to other CRAs or do collection in-house.

The bank’s loans increased by 14% year-on-year to reach 1.86 trillion rupees at the end of June 2022 and sequentially increased by 2.9% from 1.81 trillion rupees in March 2022 The growth of advances should be 15% and more in the current financial situation. year, said Prashant Kumar, Managing Director and CEO.

Its deposits increased by 18% year-on-year to reach 1.93 trillion rupees in June 2022. But sequentially, they decreased by 2% from 1.97 trillion rupees in March 2022.

The share of low-cost money – current account and savings account (CASA) increased to 30.8% in June 2022, from 27.4% a year ago. The Bank has given indications of 35% for CASA by the end of March 2023.

The bank had launched a floating rate deposit system with a repo rate as a benchmark during the June quarter. The response is mixed and has raised Rs 300 crore from 14,000 customers till date.

The pace of deposit mobilization would be higher than the growth of advances, Kumar says, adding that the loan-to-deposit ratio will be around 95% in FY23.

The bank’s capital adequacy ratio stood at 17.7% in June 2022 compared to 17.9% in June 2021. Although the current level of capital is comfortable, it plans to raise capital in the remaining portion of FY23, the CEO added.

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