Yes Bank, a private sector lender based in the city, has announced a significant increase in its net profit for the September quarter. The bank reported a net profit of Rs 228.64 crore, marking a 47% increase compared to the same period last year. However, it should be noted that the bank’s net profit for the previous quarter was Rs 347 crore.
Despite an 11.2% growth in loans, Yes Bank’s core net interest income for the reporting quarter was Rs 1,925 crore. This was attributed to a decrease in the net interest margins (NIM) to 2.3%, a 0.30 percentage point compression. The bank experienced a 0.20 percentage point impact on NIMs due to the repricing of past deposits with elevated interest rates. Additionally, there was a 0.35-0.40 percentage point drag from shortfalls in meeting priority sector lending targets, resulting in low-yielding deposits in the Rural Infrastructure Development Fund.
Managing Director and CEO of Yes Bank, Prashant Kumar, expressed confidence that the bank is nearing the end of the NIM slip and is focused on expanding their numbers moving forward. The impact of deposit repricing is not expected to be seen again, and efforts are being made to address the shortfall in priority sector lending targets by potentially purchasing PSL certificates from the market and organically expanding loan books. Additionally, Yes Bank is exploring the possibility of acquiring a microlender.
Kumar revealed that Yes Bank aims to achieve a 15% loan book growth and an 18% expansion in deposits for FY24. In response to concerns raised by the Reserve Bank of India regarding unsecured loans such as credit cards and personal loans, Kumar acknowledged an increase in delinquencies in the portfolio, particularly in assets overdue for more than 30 days but not yet classified as non-performing assets. The bank’s gross NPAs from unsecured loans stood at 2.1%, higher than the 1.4% retail NPAs and the overall bank average of 2%.
Considering the higher stress on unsecured loans, Yes Bank has adopted a cautious approach towards retail assets growth. The bank aims to achieve an optimum level of 48% retail contribution in the overall assets mix. In the September quarter, two-thirds of the fresh slippages totaling Rs 1,200 crore were from retail loans. However, corporate loans, which had previously posed challenges for the bank, are performing well.
The bank reported overall provisions of Rs 505 crore, compared to Rs 583 crore in the same period last year. Kumar stated that the bank is maintaining its guidance on overall credit costs. Yes Bank plans to open an additional 150 branches in FY24, with 20 branches already opened. As of September 30, 2023, the bank’s overall capital adequacy stood at 17.1%, and there are no current plans for a fund raise.
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