Private sector lender Yes Bank started off the year 2018-19 on a
strong note with profit growth of 31 percent in June quarter but asset quality
weakened.
Profit for the
quarter stood at Rs 1,260.4 crore, which increased from Rs 965.52 crore in
corresponding period last fiscal. The profitability was driven by NII, other
income and operating income but higher provisions limited growth.
Net interest
income during the quarter grew by 23 percent year-on-year to Rs 2,219.14 crore
with robust loan growth of 53.4 percent but net interest margin contracted to
3.3 percent (from 3.7 percent in Q1FY18 and 3.4 percent in Q4FY18).
"Advances
grew by 53.4 percent YoY to Rs 2,14,720.1 crore on the back of robust growth
across corporate, IBU, MSME and retail businesses. Retail banking advances grew
by 105.2 percent YoY to 14 percent of Advances (up from 10.5 percent as on June
30, 2017)," the bank said.
Deposits during the quarter rose 42
percent YoY to Rs 2,13,394.5 crore with CASA ratio at 35.1 percent on the back
of 35.7 percent YoY growth. "Saving account deposits at Rs 46,597.5 crore)
and current account deposits (Rs 28,332.5 crore) posted strong growth of 26.9
percent and 53.1 percent YoY respectively," the bank said.
Other income
(non-interest income) shot up 50 percent to Rs 1,694 crore and operating profit
surged 44 percent to Rs 2,455 crore compared to same quarter last year. Tax
expenses spiked 26 percent to Rs 568.7 crore YoY. Asset quality
weakened for the quarter ended June 2018 with gross non-performing assets (NPA)
rising to 1.31 percent against 1.28 percent in previous quarter, though net NPA
was lower at 0.59 percent versus 0.64 percent sequentially.
In absolute
term, gross NPA increased 8 percent quarter-on-quarter to Rs 2,824.5 crore
while net NPA declined 4 percent to Rs 1,262.6 crore QoQ. Slippages for
the quarter stood at Rs 560 crore, which increased compared to Rs 380.2 crore
reported in the previous quarter. Out of which Rs 314.8 crore is expected to be
fully recovered before September 2018 (supported by liquid/marketable
securities), the bank said.
Total stressed
book (NNPA + net security receipts + standard restructured exposure) declined
steadily to 1.52 percent (Rs 3,283 crore from 1.73 percent (Rs 3,535 crore)
sequentially.
The bank has not
sold any loans to asset reconstruction companies in the quarter. "During
the quarter one security receipt investment with carrying value of Rs 103.1
crore was fully redeemed in line with bank’s expectation of redemptions/
recoveries of 30-40 percent during FY19."
Standard
restructured exposure for the quarter stood at Rs 249.4 crore, declined
compared to Rs 337.6 crore in the March quarter. Yes Bank said
out of exposure to NCLT (National Company Law Tribunal) list 1 accounts (which
is only 0.01 percent of gross advances), it has recovered Rs 184 crore from one
account. Consequently, it has residual exposure to only one account with an
exposure of Rs 23.4 crore (funded exposure only), classified as NPA and
provisioning coverage of 50 percent. "We expect to fully recover this
exposure."
Under NCLT list
2 accounts (which is 0.31 percent of gross advances), its total exposure stood
at Rs 654.7 crore across 7 accounts. Out of which entire funded exposure
aggregating to Rs 568 crore (across 3 accounts), is classified as NPA and has
provision coverage of 43 percent, it said.
Provisions and
contingencies spiked 57 percent quarter-on-quarter (119 percent year-on-year)
to Rs 625.6 crore for the quarter ended June. Provision coverage ratio improved
to 55.3 percent from 50 percent sequentially, but declined compared to 60
percent in June 2017.
"Provisions
stood at Rs 625.7 crore of which Rs 379.9 crore is NPA provisioning which includes
Rs 149.0 crore towards increase in provision coverage to 55.3 percent and Rs
92.7 crore is towards MTM losses on Bonds. MTM losses of Rs 278.0 crore will be
amortized during FY19 under the RBI dispensation," the bank reasoned.
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