Yes Bank, a private sector lender headquartered in the city, has reported a significant increase in its net profit for the September quarter. The bank’s net profit rose by over 47% to reach Rs 228.64 crore, compared to Rs 160.41 crore in the same period last year. However, this figure is lower than the net profit of Rs 347 crore reported in the previous quarter.
Despite an 11.2% loan growth, Yes Bank’s core net interest income for the reporting quarter was Rs 1,925 crore. The bank’s management attributed the slight decrease in net interest margins (NIM) to 2.3% to a 0.30 percentage point compression. This was primarily caused by the repricing of past deposits and shortfalls in meeting priority sector lending targets.
Managing Director and Chief Executive Prashant Kumar expressed confidence that the bank is close to resolving the NIM issue and intends to expand its numbers moving forward. He stated that the impact of deposit repricing will not be seen again, and the bank is exploring options such as purchasing Priority Sector Lending (PSL) certificates from the market and organically expanding its loan books. Additionally, Yes Bank is considering the acquisition of a microlender.
Looking ahead, the bank aims for a 15% loan book growth and an 18% expansion in deposits by FY24. Addressing concerns about unsecured loans, Kumar acknowledged increased delinquencies in the portfolio, specifically in assets that are overdue for over 30 days but have not yet become non-performing assets. The gross NPAs from unsecured loans currently stand at 2.1%, higher than the retail NPAs of 1.4% and the bank’s overall NPA ratio of 2%.
Kumar emphasized the need for caution in the bank’s retail assets growth strategy due to the higher stress on unsecured loans. He also mentioned that two-thirds of the fresh slippages in the September quarter, amounting to Rs 1,200 crore, were from retail loans. However, corporate loans, which have been a concern in the past, are performing well.
Regarding provisions, Yes Bank recorded overall provisions of Rs 505 crore in the September quarter, compared to Rs 583 crore in the same period last year. Kumar stated that the bank is maintaining its guidance on the overall credit costs.
Looking at expansion plans, the bank intends to open 150 new branches in FY24, with 20 already opened. As of September 30, 2023, Yes Bank’s capital adequacy ratio stood at 17.1%. It has no immediate plans for a fund raise.
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