Yes Bank Profit Rises 31% In Second Quarter, Provisions Decline Sequentially

Yes Bank Ltd. registered a 31.3 percent jump in net profit in the July to September quarter of the fiscal year 2016-17, beating street estimates.

Net profit of the private lender increased to Rs 801.5 crore, from Rs 610.4 crore in the same quarter last year, according to its financial results posted on the BSE. A Bloomberg poll of analysts’ estimate had pegged the bottomline at Rs 757.4 crore.

Yes Bank’s provisions during the quarter were lower than expected at Rs 161.7 crore. Bloomberg consensus estimates showed that analysts had anticipated much higher provisions during the quarter, that is as much as Rs 361 crore.

Net interest income jumped 30.5 percent during the quarter, from Rs 1,446.2 crore, also exceeding the Bloomberg estimate of Rs 1,388.9 crore.

Asset quality showed a slight decline during the quarter with the gross non-performing assets (GNPA) increasing 8.5 percent and amounting to Rs 916.68 crore on a quarter on quarter basis. The GNPA ratio rose to 0.83 percent from 0.79 percent over the quarter, while net non-performing asset ratio remained absolutely flat at 0.29 percent.

Provisions fell 21.8 percent to Rs 161.7 crore over the quarter, as per the press statement.

Net interest margins remained stable at 3.4 percent for the quarter.

Management Commentary

A key input from the press conference to announce the results for the second quarter was the guidance on credit cost for the remainder of the financial year.

Managing Director and Chief Executive Officer, Rana Kapoor said the bank would look to keep credit costs between 50 and 60 basis points for the full financial year. In the first quarter, Yes Bank’s credit cost stood at 16 basis points, and in the second quarter it was 11 basis points.

The bank’s earlier guidance for credit cost in the current financial year was 50-70 basis points.

Kapoor also said that the cost to income ratio for the bank had not bottomed out at 40.6 percent and that there was still scope for improvement. In the long run, he said Yes Bank is in a position to bring cost to income ratio down to between 35 and 36 percent.

On the much talked about failed attempt by Yes Bank to raise $1 billion through a qualified institutional placement of shares last month, Kapoor said approvals to raise the funds are in place till June 2017. The bank has said that it intends to raise $1 billion through a QIP in one or more tranches.

Kapoor also indicated that the bank might look to work with a different set of bankers and legal experts. He said the bank would look at working with bankers and legal support teams that they had the highest confidence in.

Key Highlights

• Total deposits grew 28.9 percent to Rs 128,023.8 crore as on September 30, 2016.
• CASA deposits grew 53.2 percent to Rs 38,784 crore from Rs 25,318.3 crore on a year-on-year basis.
• The bank’s CASA ratio, which is current and savings account deposits as a percentage of total deposits, stood at 30.3 percent as of the September quarter, crossing the 30 percent mark for the first time ever. The CASA ratio stood at 25.5 percent at the end of this period last year.
• The total capital adequacy as per Basel III is 15 percent with the Tier I ratio at 10.1 percent.
• The board has also approved a $1 billion fundraising plan through qualified institutional placement (QIP) in one or more tranches.
• The board also approved raising Rs 10,000 crore through debt instruments.

The Yes Bank management, which is facing the heat for an alleged debit card fraud affecting more than 32 lakh cards, claims it has carried out detailed checks and can confirm that there has not been a breach at any of its ATMs.