Asset quality improves: Yes Bank reports Rs 151-crore profit on strong interest income

Advances during the December quarter rose 1.7% sequentially to Rs 1.69 lakh crore.

Yes Bank on Friday reported a net profit of Rs 151 crore for the December quarter (Q3FY21) because of healthy interest income and an improved asset quality. The lender had incurred a loss of Rs 18,560 crore in Q3FY20. Sequentially, the net profit increased 17.05%.

The operating profit for the quarter under review increased 68% QoQ to Rs 2,286 crore. The lender had reported an operating loss of Rs 6 crore during the same quarter last year. The net interest income (NII) increased 140% year-on-year (YoY) and 30% QoQ to Rs 2,560 crore.

Prashant Kumar, managing director and chief executive officer, said the lender is seeing a very good improvement in the business as well as profitability. “We expect our advances to grow by 12% in the next financial year (FY22).”

Advances during the December quarter rose 1.7% sequentially to Rs 1.69 lakh crore. The lender disbursed Rs 12,000 crore of retail loans in Q3FY21, surpassing its own target of Rs 10,000 crore for the quarter.

Kumar also said the bank will continue its focused approach on recovery. “We are hopeful that recovery in the fourth quarter will be better than the third quarter,” he said. The bank has made a cash recovery of Rs 1,512 crore in the December quarter.

Kumar said the bank has made adequate provisions for the restructuring and standstill non-performing assets (NPAs). “We have invoked restructuring to the extent of Rs 8,000 crore. The bank has made Rs 2,683-crore provision for the same,” he said.

The asset quality showed an improvement in Q3FY21. Gross NPAs improved 154 basis points (bps) to 15.36%, compared to 16.90% in the previous quarter. Net NPAs came down 67 bps to 4.04% from 4.71% in the September quarter. “There will be an addition of 4.5% in gross NPAs if the Supreme Court direction on not allowing banks to declare fresh NPAs is lifted,” Kumar said.

The provision coverage ratio stood at 76.8% as on December 31, 2020. The net interest margin improved to 3.4%, showing a Y-o-Y growth of 200 bps and Q-o-Q rise of 30 bps.

Deposits rose 7.7% sequentially to Rs 1.46 lakh crore. The current account savings account (CASA) ratio stood at 26%, compared to 24.8% at the end of September 2020.

The bank has the approval of the board for raising Rs 10,000 crore. “It is an enabling provision for raising funds as and when required,” Kumar said. The capital adequacy ratio stood at 19.6% as on December 31, 2020.

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