Yes Bank Ltd, the youngest of India’s private sector banks, on Wednesday said net profit grew 35% in the fiscal third quarter on higher interest and fee income and improved margins.
Net profit rose to Rs.342.3 crore, or Rs.9.39 per share, in the three months ended 31 December from Rs.254.1 crore, or Rs.7.08 per share, in the year-ago quarter. The result beat expectations of Rs.323 crore in profit based on a Bloomberg survey of analysts.
Yes Bank’s net interest income —a measure of the difference between interest earned on loans and that paid for deposits—increased 37% in the quarter to Rs.584 crore from Rs.427 crore a year ago.
Net interest margin, or the difference between the rate charged for loans and that paid for deposits, improved to 3% from 2.8% in the corresponding period last year because of an increase in low-cost current and savings account deposits, managing director and chief executive Rana Kapoor said.
Net non-performing assets remained unchanged at 0.04% of the total loan book. The bank has recast advances worth Rs.189.1 crore, or 0.43% of its loan book.
Yes Bank has been able to manage asset quality fairly well, Rikesh Parikh, vice-president for markets strategy and equities at Motilal Oswal Securities Ltd, said in a research note.
“Provisions at Rs.56.7 crore was marginally above estimate of Rs.50 crore,” Parikh said.
Kapoor did not deny that Yes Bank was in talks to buy the Indian retail and commercial banking businesses of Royal Bank of Scotland Group Plc. (RBS). “We are receptive to any such development because it will fit strategically with our retail banking plans by giving access to trained staff and a small but strong book, particularly products like credit cards,” Kapoor said. He refused to give further details.
A part of the Indian business of RBS has been up for sale for over two years now. Its proposed deal with Hongkong and Shanghai Banking Corp. Ltd (HSBC) collapsed in November. RBS has 31 branches in India, but has shrunk both deposits and advances in the past few years.
Yes Bank shares lost 1.87% to Rs.518.25 on Wednesday on BSE after rising to a life-time high of Rs.535.
The benchmark Sensex dropped 0.85%, and the banking index, Bankex, fell 1.66%.