YES Bank Q3FY21 net at Rs 151 cr versus Rs 18,560 cr loss a year ago

NIMs at 3.4%; will decline post SC verdict in NPA case; Board clears equity raise up to Rs 4,000 cr

Private sector lender YES Bank has posted a net profit of Rs 151 crore in the third quarter ended December 2020 (Q3FY21), on improved net interest margins. It had booked a staggering loss of Rs 18,560 crore in third quarter ended December 2019 (Q3FY20).

Sequentially, net profit was up 16.5 per cent over September 2020 (Q2FY21). Its stock closed 1.56 per cent higher at Rs 90.9 per share on Bombay Stock Exchange (BSE).

It posted a 29.7 per cent in net interest income (NII) at Rs 2,560 crore over September 2020 quarter. Also, net interest margins (NIMs) improved by 30 basis points to 3.4 per cent over September 2020. However, NIM may not sustain at the current level as there would be interest income reversal for after the Supreme Court gives verdict on asset quality status, said its managing director and chief executive Prashant Kumar. The lender, which is backed by State Bank of India, has guided for NIM to around three per cent for the next financial year (FY22).

The non-interest income rose 69 per cent to Rs 1,197 crore over September 2020 quarter on back of significant increase seen in retail fees.

On asset quality front, the banks provision coverage ratio (PCR) showed improvement. Sequentially, PCR for NPAs rose to 76.8 per cent from 75.7 per cent in the last quarter. The PCR for non-performing investments was at 77.9 per cent, up from 70.6 per cent in September 2020. Also, the cash recoveries in quarter were around Rs 1,500 crore.

During Q3FY21, advances amounting to Rs 1,384 crore were classified as Standard Restructured on account of deferment of DCCO (Date of Commencement of Commercial Operations) in accordance with Reserve Bank of India norms.  

The Supreme Court has said that the accounts which were not classified as NPA till August 31, 2020 shall not be so classified by banks till further orders from the top court. Assuming absence of a court directive, on proforma basis Gross Non-Performing Assets (NPAs) were at 20 per cent as of December 2020.

Its net advances rose sequentially by 1.7 per cent to Rs 1,69,721 crore on strong pickup in Retail and SME disbursements. It disbursed Rs 12, 000 crore to retail and SMEs and Rs 2,000 crore on corporate side. The focus remains on retail and SMEs and continuing on de-risking of corporate portfolio, Kumar said in post result media interaction. Bank expects loan book to grow at 12 per cent in FY22.

Deposit grew by 7.7 per cent to Rs 1,46,233 crore. The share of low cost deposits – Current Account and Savings Deposits (CASA) – moved up to 26 per cent in December from 24.8 per cent. It was 26.6 per cent in March 2020.

Its capital adequacy stood at 19.5 per cent in December 2020.