BackYes Bank profit rises 18.8% on lower provisions, higher other income
Other income rises 17.43% from a year ago; provisions and contingencies fall 25.88% in March quarter
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Mumbai: Yes Bank Ltd, India’s youngest commercial bank, said on Wednesday that its net profit increased by nearly one-fifth in the March quarter as it earned higher fee and interest income and lowered provisions.
Net profit rose 19% from a year earlier to ₹ 430 crore in the three months. Non-interest income was ₹ 446 crore, up 17% from a year ago, led by higher fees from segments such as transaction retail banking. Provisions and contingencies fell 26% to ₹ 72 crore as the “the bank did not need to provide more with a 86% provision coverage ratio", said Rajat Monga, senior group president (financial markets) and chief financial officer.
Net profit was marginally ahead of the estimate of ₹ 422 in a Bloomberg poll of 28 analysts.
Net interest income, or be interest earned on loans minus interest paid for deposits, rose to ₹ 720 crore from ₹ 638 crore a year earlier.
The bank’s loan book grew to ₹ 55,633 crore from ₹ 47,000 crore in the March quarter as it raced to meet its priority sector requirements by giving loans to agriculture and allied activities, small-scale industries and microfinance institutions. Indian banks have to channel 40% of their loans to the so-called priority sector, 18% of which has to be to agriculture.
The bank is currently in the news after reports that L&T Finance Holdings Ltd, the non-banking financial arm of engineering to information technology conglomerate Larsen and Toubro Ltd (L&T), is looking to either buy a stake in Yes Bank or combine the two entities after it lost out on a banking license.
The bank has not issued any denial of the report, although Yes Bank managing director and chief executive officer Rana Kapoor called the report “amusing".
Monga also did not deny the report outright. “Whatever the bank has to say has been said in the news report. We have no information on this, and if the bank is issuing shares, it will only happen with a full public disclosure. The bank is on its feet firmly and rest everything is circumstantial," Monga said about a possible share sale to L&T Finance.
Yes Bank shares rose 1.67% to close at ₹ 441.55 on BSE. It had earlier touched a high of ₹ 445.70, or a rise of as much as 2.62%. L&T Finance rose 0.51% to ₹ 68.85 after touching an intraday high of ₹ 70.45, a rise of as much as 2.85%.
The bank is currently facing a case filed by Madhu Kapur, the sister-in-law of Rana Kapoor, demanding the right to nominate directors on the board. Kapur is the widow of Yes Bank co-founder Ashok Kapur and holds a 12% stake in the bank, while Rana Kapoor, directly and through other family-owned ventures, holds a 13.59% stake in it.
Earlier this month, a two-judge bench of the Bombay high court directed Rana Kapoor and Madhu Kapur to resolve the dispute amicably.
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