YES Bank Q3 net profit surges 77% to Rs 266 cr on lower provisions

However, the bank has lowered the guidance for credit growth in FY22 to 10% from an earlier estimate of 15%

Private sector lender YES Bank’s net profit rose by 77 per cent at Rs 266 crore for the third quarter ended December 2021 (Q3FY22) predominantly on reduction in provisions.

The net profit was Rs 151 crore in Q3FY21. Sequentially, net profit rose by 18.2 per cent to Rs 225 crore in the second quarter ended September 2021 (Q2FY22).

Net interest income (NII) declined by 31.1 per cent to Rs 1,764 crore in Q3FY22 as against Rs 2,560 crore for Q3FY21, the lender said in a stock exchange filing on Saturday. Sequentially, NII grew by 16.6 per cent from Rs 1,512 crore in Q2FY22.

Explaining the drop in NII on YoY basis, bank executives, in a media call, said the bank had not tagged accounts as non-performing assets Q3FY21 in compliance with Supreme Court order and booked income. After vacation of stay, recognition of NPAs began and income was reversed in the fourth quarter (Q4FY21), the lender said.  

Its net interest margin (NIM) declined at 2.4 per cent in Q3FY22 from 3.4 per cent in Q3FY21. Sequentially, NIM rose from 2.2 per cent in Q2FY22.

The non-interest income declined by 32.5 per cent on YoY basis to Rs 734 crore in Q3FY22 from Rs 1,087 crore in Q3FY21. Sequentially, it declined by 5.7 per cent from Rs 778 crore in the quarter ended September 2021.  

Its gross advances grew by 3.8 percent to Rs 1.76 trillion in Q3FY22 as against Rs 1.69 trillion in Q3FY21. The bank has lowered the guidance for credit growth in FY22 to 10 per cent from an earlier estimate of 15 per cent.

Prashant Kumar, managing director and chief executive, said the growth in retail, MSMEs, mid-corporate segments is intact. "But there has been de-bulking and deleveraging by large corporates. This has led to scaling down of target. The credit growth in the nine-month period ended December 2021 was six per cent and the balance four per cent would happen by March," he said.

The total deposits increased by 26 per cent to Rs 1.84 trillion in Q3FY22 from Rs 1.46 trillion a year ago. The share of low cost money – Current Account and Saving Account (CASA) – improved to 30.4 per cent in December 2021 from 26 per cent a year ago and 29.4 per cent in September 2021.

Its provisions were down sharply by 82.1 per cent at Rs 375 crore in Q3FY22, from Rs 2,089 crore in Q3FY21. Sequentially also provisions were down from Rs 377 crore in Q2FY22.

The provision coverage ratio (PCR) stood at 79.3 per cent in December 2021 as against 81.5 per cent a year ago and 78.9 per cent as of September 2021.

Its gross NPA declined to 14.7 per cent in December 2021 from 15.4 per cent in December 2020 and 15 per cent in September 2021. The Net NPA rose to 5.3 per cent in December 2021 from 4.0 per cent a year ago. But they declined marginally from 5.5 per cent in September 2021.

About the formation of asset reconstruction company (ARC), Kumar said the bank is trying to complete the process and transfer of NPAs (Rs 50,000 crore) by March 2021. But amid uncertainties due to Covid and regulatory approvals, the work may get pushed to the first quarter of the new financial year (FY23). The transfer would also include written-off loans as well.

   

There is sufficient capital for now and the bank may consider tapping the market for capital in the next financial year, Kumar said.  Its capital adequacy ratio stood at 17.7 per cent with common equity tier I of 11.6 per cent in December 2021.