Yes Bank Ltd’s fiscal first-quarter profit rose 33% from a year ago on higher net interest income and other income.
Net profit rose to Rs.731.80 crore in the three months ended on 30 June from Rs.551.20 crore a year ago. That beat the average profit estimate of Rs.700.40 crore based on a survey of 21 analysts by Bloomberg.
Net interest income (NII), or the core income a bank earns by giving loans, increased 24% to Rs.1,316.58 crore in the June quarter from Rs.1,059.81 crore last year. Other income increased 65% to Rs.900.52 crore from Rs.545.17 crore in the same period last year.
“We have seen our treasury portfolio perform really well. Gains from the portfolio rose to Rs.202 crore from Rs.116 crore last year. Corporate banking fees has also risen to Rs.409 crore during the quarter from Rs.364 crore a year ago,” said Rana Kapoor, managing director and chief executive officer, Yes Bank.
Net interest margin expanded to 3.4% from 3.3% a year ago.
Total advances rose 33% to Rs.1,05,942 crore as on 30 June. Of this, the share of corporate banking was at 67.5%; retail and business banking operations comprised rest of the book.
“Thanks to our offshore branch opened last year, we have been able to make further inroads in sectors such as pharmaceuticals, auto and renewable energy. We have seen growth in our capital goods and agriculture books as well,” Kapoor said.
The bank aims to grow the share of its retail and business banking unit to 45% of its total loan book by 2020. To grow its retail franchise, the bank will be launching its credit card business next week, Kapoor said.
“We will be launching up to seven variants in this to capture all segments of the market,” he added.
The private sector lender’s deposits rose 29% from a year ago to Rs.1.23 trillion at the end of the first quarter. Of this, current account savings account (CASA) constituted Rs.36,288.3 crore, or about 30% of total deposits. CASA deposits grew 63% from last year.
Gross non-performing assets (NPAs) at Yes Bank rose 13% to Rs.844.56 crore at the end of the June quarter from Rs.748.98 crore in the March quarter. As a percentage of total loans, gross NPAs stood at 0.79% at the end of the June quarter as compared to 0.76% in the previous quarter and 0.46% in the year-ago quarter.
Provisions and contingencies rose 11% to Rs.206.63 crore in the quarter from Rs.186.46 crore a quarter ago. Provisions more than doubled from Rs.97.96 crore in the year earlier quarter. Net NPAs were at 0.29% in the June quarter compared to 0.29% in the previous quarter and 0.13% in the same quarter last year.
“Credit cost for the quarter was at 0.15%. We expect the credit cost for the year to remain within our previous guidance of 50-70 basis points,” Kapoor said.
During the quarter, the bank reported one case which is being considered under the strategic debt restructuring (SDR) norm of the Reserve Bank of India (RBI). Yes Bank’s exposure is around Rs.34 crore, Kapoor said. The private sector lender did not sell any loans to asset reconstruction companies in the April-June period.
On Wednesday, the bank reported that it had received an approval from capital markets regulator Securities and Exchanges Board of India to start an asset management company. RBI had already cleared the proposal in October.
“While operationally the bank has been doing good, with the recent rally in the stock the valuations seems rich. While existing investors can continue to hold the stock, fresh additions can be considered only on declines,” said Siddharth Purohit, an analyst with Angel Broking Ltd.
Yes Bank stock’s was little changed at Rs.1,200.10 on BSE, while the exchange’s benchmark Sensex rose 0.17% to 28,024.33 points.