Yes Bank Q2 profit declines 3.8% to ₹964.7 cr on higher provisions
Yes Bank net profit for the second quarter stood at Rs964.70 crore against Rs1002.73 crore a year ago
Yes Bank Ltd on Thursday posted a 3.8% decline in profit to ₹964.7 crore in the September quarter owing to higher provisions.
The bank said it has absorbed a one-time impact of ₹252 crore as mark-to-market (MTM) provisions, primarily on corporate bonds. Total provisions more than doubled to ₹939 crore in the September quarter. The profit came in below expectations as a survey of 18 analysts by Bloomberg had estimated a profit of ₹1,273.80 crore in the quarter.
The bank also said it has an exposure of ₹ 2,620.7 crore to the troubled Infrastructure Leasing & Financial Services Ltd (IL&FS) group as of September 2018. However, it clarified that these accounts are all standard and the exposures are at the lower special purpose vehicles (SPVs) and not at the upper IL&FS holding company levels.
“SPVs will have to be dealt with their own merit in terms of what the underlying performance of the underlying asset is, and at the moment, we continue to be satisfied with our exposure to IL&FS which does not require provisioning,” said Rajat Monga, senior group president, Yes Bank.
The bank’s net interest income (NII)—the difference between interest earned and interest expended—grew 28% y-o-y to ₹2,417.6 crore. Its net interest margin (NIM)—a key measure of profitability—stood at 3.3%, down 40 bps y-o-y. The bank’s other income rose 18% y-o-y to ₹1,473.45 crore.
Yes Bank’s gross non-performing assets (NPAs) as a percentage of gross advances fell 22 bps y-o-y to 1.6% and net NPAs were down 20 bps y-o-y at 0.84%. On an absolute basis, gross NPAs grew 42% y-o-y to ₹3,866.08 crore at the end of the September quarter.
The bank said that a loan account with exposure of ₹631.2 crore was classified as NPA during quarter and the bank expects prepayments and consequent upgrade in this account in Q3FY19.
“The loan account is awaiting a liquidity event and the loan is expected to be repaid from the sale of a business. The binding agreement for the sale of the business has been signed between the seller and the buyer,” said Monga.
He added that a part payment has been received after 30 September and the balance payment is also expected to come soon.
Total advances grew 61% y-o-y to ₹2.39 trillion and total deposits rose 41% y-o-y to ₹2.22 trillion.
Yes Bank had recently informed the exchanges that the Reserve Bank of India (RBI) has denied a three-year extension to its chief executive Rana Kapoor and asked him to step down after 31 January 2019.
Shares of Yes Bank closed 2.8% lower at ₹198.35 on BSE on Thursday, under-performing a 1% fall in the benchmark Sensex to 33,690.09 points.