Yes Bank Q3 Results: Net Profit Surges But Loan Growth Guidance Cut

Yes Bank Ltd.'s quarterly profit spiked in the third quarter, beating estimates. This was led by a plunge in provisions.

Net profit rose 76% year-on-year to Rs 266.43 crore, the private lender said in an exchange filing. Analysts polled by Bloomberg had estimated a net profit of Rs 128 crore in the October to December quarter.

Provisions for Q3 stood at Rs 374.64 crore, down 82% year-on-year.

Net interest income, or core income, fell 31% year-on-year to Rs 1,764 crore.

Other income fell by 32.5% over the preceding year to Rs 734 crore. This was led by a 77% year-on-year drop in income from forex, debt capital markets and securities business.

The bank's asset quality improved - with gross non-performing asset ratio falling 33 basis points sequentially to 14.65% as on Dec. 31, 2021. Net NPA ratio too dropped 26 basis points quarter-on-quarter and stood at 5.29%.

The third quarter saw loan recoveries worth Rs 610 crore and upgrades worth Rs 573 crore. Gross restructured loans stood at Rs 6,878 crore on Dec. 31, 2021 compared with Rs 6,184 crore on Sep. 30, 2021.

Apart from improvement in gross NPA ratio, Yes Bank also saw an improvement in its overdue loan book. Loans in default for 31-60 days or less stood at Rs 5,305 crore, down 35% year-on-year. Similarly, loans in default for 61-90 days stood at Rs 1,943 crore, down 43% year-on-year.

The bank may have outdone street estimates for the quarter but says it will not meet its loan growth guidance for the year.

Yes Bank is expected to register a loan growth of 10% for the full financial year, said Prashant Kumar, managing director and chief executive officer of Yes Bank. This is lower than the 15% loan growth guidance stated at the start of the fiscal. According to Kumar, Yes Bank's efforts in rightsizing its corporate loan book and the overall demand scenario have led to the cut in guidance.

Yes Bank Q3 Highlights

• Total advances stood at Rs 1.76 lakh crore in the third quarter, up 4% year-on-year.

• Gross retail disbursements for the quarter stood at Rs 9,313 crore.

• For small and medium enterprise loans, the gross disbursements stood at Rs 4,940 crore.

• The October to December quarter also saw wholesale loan disbursements worth Rs 4,760 crore.

• The ratio of retail and SME loans rose to 57% of the total loan book, up from 54% in Jul-Sep.

• Total deposits rose 26% from a year ago to Rs 1.84 lakh crore.

• Outstanding current account and savings account deposits rose 47% from a year ago to Rs 55,997 crore.

• In comparison, term deposits rose 19% year-on-year to Rs 1.28 lakh crore.

ARC Update

The bank is in talks with four international investors to set up a private asset reconstruction company, Kumar said in the post-earnings call with media. Once the bank has finalised an investment partner, it will seek the Reserve Bank of India's approval for an ARC license and transfer stressed loans worth up to Rs 50,000 crore to the entity, he added.

"We will set up our ARC and transfer the assets by Jun. 30 latest. The resurgence of Covid has led to the delay in closing the due diligence process," he said.

Yes Bank is expected to hold a minority stake of 20%, with the international investor holding the rest of the equity stake in the ARC, as reported earlier by BloombergQuint.