Other income pushes Yes Bank net up 26.5%; bad loans double

Mumbai: Yes Bank Thursday reported a 26.5 percent rise in net profit at Rs 610.4 crore for the second quarter ended September 30, boosted by fee income, which helped it offset the impact of rising bad loans that more than doubled in the reporting period.

The city-based private sector lender also said it will be launching an asset management business for which approvals are pending with the central bank.

The net NPAs during the quarter more than doubled to 0.20 percent from 0.09 percent in the year-ago period. Its gross NPAs jumped to 0.61 percent from 0.36 percent.

The total standard restructured advances stood at Rs 569.3 crore as of September 30, representing 0.71 percent of the gross advances, which was same as last quarter.

The bank added Rs 52 crore in fresh bad loans, its managing director and chief executive Rana Kapoor told reporters and attributed the spike to troubles in the steel sector to which it has an exposure of 3.8 percent of its total assets.

The good set of numbers come in spite of a flat net interest margin which stood at 3.3 percent quarter-on-quarter but 10 bps up year-on-year, and Kapoor expressed hope that going forward the bank will be able to better the same by 20 bps on the back a 100 bps reduction in its savings deposit rates.

The total income of the bank increased to Rs 3,995.34 crore from Rs 3,337.97 crore, while the core net interest income was Rs 1,108.5 crore, up 29.4 percent.

Its non-interest income moved up 22.2 percent to Rs 618.1 crore.

The mid-sized bank, which has around 700 branches, is focusing on low-cost Casa deposits which during the quarter rose 40.5 percent, helping the bank for the first time take savings deposits base to 25.5 percent from 22.5 percent a year ago.

Its advance grew 29 percent to Rs 80,015.1 crore but on a sequential basis, it just inched up 0.4 percent. Deposits rose 24 percent to Rs 99,344.3 crore year-on-year, and just 4.2 percent quarter-on-quarter.

Kapoor said the bank has not sold any bad assets to ARCs in the past four quarters nor has it restructured any stressed asset under the 5/25 scheme so far but if the situation arises, the bank is open to it. Similarly, there was also no write-offs during the quarter.

On fund raising, he said the bank will tap USD 1 billion worth of foreign fund window it has from the board, in 2016.

Kapoor further said the bank has considerable legroom to allow FDI or higher FII holding in the company as the current FII ownership is only around 42 percent.

He said going forward, the focus will be to improve margins by bringing the corporate loan portfolio which stood at 68.2 percent, down from 71.4 percent a year ago, and increasing the retail loan book that rose to 31.8 percent from 28.6 percent.

The bank's biggest exposure is towards the electricity sector with 9.8 percent of the total book, while the second largest chunk is towards the Epercent sector at 6.3 percent and the third being telecom with 4.4 percent.

Shares of Yes Bank closed at Rs 743.60 apiece, up two percent at the BSE.