Yes Bank Q3 profit zooms 80% as provisions decline

New Delhi: Yes Bank on Saturday reported 80 per cent jump in consolidated net profit at Rs 265.76 crore for December quarter 2021-22, helped by a fall in the provisions for bad loans.

The bank’s core net interest income declined 31 per cent to Rs 1,764 crore, despite a 0.25 per cent expansion in net interest margin to 2.4 per cent but limited by the loan growth being suppressed at 4 per cent.

On a standalone basis, the profit jumped 77 per cent to Rs 266.43 crore in the quarter under review.

Given the de-bulking exercise where it has reduced high value loans and also de-leveraging exercises by corporates, the bank has reduced its FY22 loan growth guidance to 10 per cent from the earlier 15 per cent, Managing Director and CEO Prashant Kumar said.

The provisions declined 82 per cent to Rs 375 crore from the year-ago period’s Rs 2,089 crore, helping the bottom line.

The share of gross non performing assets (NPAs) in the overall loan portfolio declined to 14.65 per cent from 15.36 per cent in the year-ago period and quarter ago’s 14.97 per cent, as the fresh slippages got contained at Rs 978 crore.

The bank management said Rs 435 crore came from corporate loans, Rs 388 crore from retail and Rs 123 crore from small businesses.

The quantum of restructured loans increased to Rs 6,878 crore from the quarter ago’s Rs 6,184 crore, which Kumar attributed to some projects facing a delay in date of commencement of commercial operations and also the COVID-2 restructuring.

Kumar said the bank’s plans for floating an asset reconstruction company (ARC) to house the entire quantum of its Rs 50,000 crore in stressed advances seem to be getting delayed by a quarter due to the fresh outbreak of COVID cases.

He said the bank has shortlisted four investors to take a stake in the proposed ARC, and expects the RBI licence and transfer of assets to happen by June this year.

The bank has decided to take a 20 per cent stake in the proposed ARC, Kumar said, choosing not to comment on reports of the vehicle being valued at Rs 12,000 crore.

The idea is to take NPAs to nil and start working afresh with a clean slate, he said.

The bank’s overall capital adequacy stood at 17.6 per cent as of December 2021, and it may consider a raising exercise next fiscal depending on the need, Kumar said.

The bank is inching towards its target of having 60 per cent of its loans from retail and small businesses, and relying on the troubled corporate segment for only 40 per cent of its loans, he said, pointing that right now the ratio stands at 57:43.

The overall share of unsecured loans stands at under 10 per cent and 15 per cent of the retail book, he said, hinting that it is comfortable with it right now. 

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