 "YES Bank: Provisioning hurts net profit growth")
YES Bank’s profit growth in the March quarter had been marginally below analyst estimates, due to the higher provisioning made for a counter-cyclical buffer, which offset the strong growth in operating income.
Core operating profit grew 37.8 per cent over a year before to Rs 938 crore, thanks to a strong growth in the loan book. Advances grew 36 per cent. Net profit grew 28 per cent to Rs 551 crore (and two per cent over the earlier quarter), disappointing the analysts.
Reliance Securities says credit costs for the bank were sequentially (meaning, over the December quarter) higher at 76 basis points (versus 45 bps in the earlier quarter and 57 bps in the same quarter of FY14), as the bank made standard asset provisioning of Rs 50 crore. Hence, profit growth came below the estimates of analysts. Emkay Global says the profit after tax of Rs 551 crore, up 28 per cent over a year, was against their estimate of Rs 560 crore.
During the quarter, YES Bank saw an absolute increase in stressed assets but the non-performing asset (NPA) ratios continue to remain healthy, claim analysts. Emkay Global says stressed assets rose sequentially, with gross NPAs and net NPAs up 12 per cent and 36 per cent, respectively. The gross NPA ratio was 0.4 per cent and net ratio was 0.1 per cent (stable over a quarter), led by strong loan growth. The provision coverage ratio, the brokerage says, was 72 per cent as compared to 77 per cent in the earlier quarter.
Restructured loans increased to Rs 380 crore from Rs 170 crore in the third quarter. In absolute terms, both NPAs and restructured loans have increased but remain low in percentage terms. Advances grew 36 per cent year-on-year in the quarter and 13.4 per cent over a quarter, higher than estimated, says Reliance Securities. Customer assets grew 25 per cent over a year, to Rs 87,100 crore.
A sequential improvement in savings and current account deposits helped margins. Analysts believe with tier-I capital at 11.5 per cent, the bank is well capitalised for growth. The healthy operating performance is expected to drive valuations, believe analysts.
Core operating profit grew 37.8 per cent over a year before to Rs 938 crore, thanks to a strong growth in the loan book. Advances grew 36 per cent. Net profit grew 28 per cent to Rs 551 crore (and two per cent over the earlier quarter), disappointing the analysts.
Reliance Securities says credit costs for the bank were sequentially (meaning, over the December quarter) higher at 76 basis points (versus 45 bps in the earlier quarter and 57 bps in the same quarter of FY14), as the bank made standard asset provisioning of Rs 50 crore. Hence, profit growth came below the estimates of analysts. Emkay Global says the profit after tax of Rs 551 crore, up 28 per cent over a year, was against their estimate of Rs 560 crore.
During the quarter, YES Bank saw an absolute increase in stressed assets but the non-performing asset (NPA) ratios continue to remain healthy, claim analysts. Emkay Global says stressed assets rose sequentially, with gross NPAs and net NPAs up 12 per cent and 36 per cent, respectively. The gross NPA ratio was 0.4 per cent and net ratio was 0.1 per cent (stable over a quarter), led by strong loan growth. The provision coverage ratio, the brokerage says, was 72 per cent as compared to 77 per cent in the earlier quarter.
Restructured loans increased to Rs 380 crore from Rs 170 crore in the third quarter. In absolute terms, both NPAs and restructured loans have increased but remain low in percentage terms. Advances grew 36 per cent year-on-year in the quarter and 13.4 per cent over a quarter, higher than estimated, says Reliance Securities. Customer assets grew 25 per cent over a year, to Rs 87,100 crore.
A sequential improvement in savings and current account deposits helped margins. Analysts believe with tier-I capital at 11.5 per cent, the bank is well capitalised for growth. The healthy operating performance is expected to drive valuations, believe analysts.