YES Bank Q2 net profit dips 3.8% to Rs 9.64 billion as provisions double

Net interest income rose 28% to Rs 24.17 bn from Rs 18.85 billion a year ago; Other income up 18% to Rs 14.73 bn

Private lender Yes Bank posted posted a fall of 3.8 per cent in net profit for the September quarter, as provisions grew more than double over the year-ago quarter.

MD & CEO Rana Kapoor, whose term was cut short by the Reserve Bank of India to end January, gave the bank’s press conference a miss, despite being scheduled to address it.

There has been no further progress of succession planning by the bank, said Yes Bank’s Senior Group President-Financial Markets, Rajat Monga. He added that it will take weeks for the advisory firm to submit candidates for Kapoor’s successor to the board.

Net profit for the quarter stood at Rs 9.64 billion against Rs 100.27 billion a year ago, said the bank in a stock exchange filing.

Net interest income (NII) rose 28.2 per cent to Rs 24.17 billion in September 2018, from Rs 18.85 billion in the year-ago quarter. Other income rose 18 per cent to Rs 14.73 billion for the quarter ended September.

The gross non-performing asset (GNPA) ratio for the quarter stood at 1.6 per cent, lower than 1.82 per cent in year-ago quarter. However, there was a spike of 29 bps over the previous quarter’s GNPA ratio of 1.31 per cent.  

Provisions and contingencies surged more than double to Rs 9.4 billion in the quarter against Rs 4.47 billion a year ago. The bank provided for Rs 4.09 billion towards NPA provisioning and Rs 3.45 billion towards investments provisioning while 1.17 billion was standard provisioning.

The bank’s provision coverage ratio stood at 47.8 against 43.3 per cent in year ago quarter. While provisions grew by over 50% over June quarter in actual terms, the provision coverage ratio fell by 750 basis points.

The bank has an exposure of Rs 26.2 billion to debt-ridden Infrastructure Leasing & Financial Services (IL&FS) . This exposure is to IL&FS’ asset rich subsidiaries and special purpose vehicles and not the parent company. Monga said that the bank has not provided any additional provision and are comfortable with their exposure.

Net Interest Margin (NIM) stood at 3.3 per cent on September 2018 stable against the previous year’s September quarter.

CASA (Current Accounts- Savings Accounts) Ratio fell to 33.8 per cent against 35.1 per cent in June quarter and 37.2 per cent in year-ago quarter. Monga said that this was an impact of ‘remonetisation’, the counter effect to demonetistion where banks’ saw a high influx of CASA deposits. He said that the cash in circulation has gone up again, which leaks from CASA deposits.

Advances grew by 61.2 per cent to Rs.2396 billion on September 2018, while deposits grew at 41 per cent to Rs 2283 billion.

The bank’s exposure to non banking financial companies (NBFC) and housing finance companies stands at 2.6 per cent and 3.2 per cent respectively of their total loan book. Monga said that the bank will look at buying NBFC portfolios, especially mortgage based loans.  

The bank’s stock closed at Rs 198.35 on BSE, down by 2.77 per cent from previous close. Results came out post market hours.