Yes Bank net profit jumps 25% despite rise in bad loans

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Private sector lender Yes Bank on Friday reported an increase of 25% in net profit at Rs 675.74 crore in the December quarter, driven by higher interest income even though its bad loans jumped sharply following a regulatory review of top stressed accounts. Shares of Yes Bank closed at Rs 746.90 per scrip, up 10.89% on BSE.

The city-based bank said the sharp rise in bad loans was due to RBI review of top accounts which saw its net NPAs doubling to 0.22% in the quarter under review, as against 0.1% an year ago. Due to sharp increase in NPAs, its provisioning for bad loans grew over two-fold to Rs 187.2 crore during the quarter, while gross NPAs jumped to 0.66% or Rs 558.6 crore from 0.42% an year ago.

Yes Bank Managing Director and Chief Executive Rana Kapoor said the bank has provided for almost 75% of new stressful accounts and that the remaining would be provided for in the March quarter. He was categorical in stating that there will not be any additional provisioning beyond the March quarter under the RBI review of special large accounts.

He attributed the bootomline growth to steady increase in net interest income on the back of an improving retail franchise, improvements in NIM, and the overall preservation of asset quality. The interest earned rose to Rs 3,376.05 crore during December quarter, up 13.60%, while net interest margin expanded by 20 bps to 3.4%, taking its total income up 17.5% to Rs 4,122.12 crore.

Credit cost rose to 14 bps due to higher provisions, but he said the bank is confident of containing it at 50 bps, 20 bps lower than its earlier guidance. Kapoor said the bank has neither restructured any account during the quarter nor has it sold any account to ARCs.

Similarly, it has not availed of the SDR window as well as the 2/25 scheme during the quarter. The bank’s Advances grew 26.7% to Rs 84,396.2 crore, while deposits grew 23.1% to Rs 101,437.2 crore.

During the quarter, the bank hired 777 people, out of which more than 90% are for retail business, and it would hire nearly 600 more during the remaining period of the current fiscal, Kapoor said, adding the bank added 50 more branches in December quarter.

The bank has received the RBI nod for entering the mutual fund business and is now awaiting Sebi’s approval. He expressed hope that the bank may be able to launch the business by the end of this year.

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