YES Bank Q1 net up 9.6% at Rs 439 cr

YES Bank has reported a 9.6 per cent growth in net profit to Rs 439 crore for the April-June quarter.

Gains from treasury income have been muted, though net interest income (NII) was higher by 13 per cent. The net profit was three per cent below the Bloomberg estimate of Rs 452.6 crore.

The bank said growth in net profit was limited due to extraordinary gains in the bond portfolio of the first quarter of 2013-14, which were absent in the period under review. "The gains were Rs 100-125 crore, due to interest rates falling. That opportunity did not present itself in the current quarter,” said Rajat Monga, group president, financial markets, and chief financial officer. “Adjusted for this higher base, we should have reported an 18-19 per cent growth in net profit.”

The NII grew 13.1 per cent in the first quarter, to Rs 745 crore as compared with the corresponding quarter a year before. Non-interest income fell 3.7 per cent to Rs 425.6 crore.

“We had continued our investments in people and technology, due to which costs are higher by about 20 per cent,” said Monga.

The total net income rose 6.3 per cent to Rs 1,171 crore. The Net Interest Margin (NIM) was stable at three per cent. “We will hopefully report a jump in margins because we now have more equity," said Monga. "We have raised equity, which will have an impact on margins. NIMs might be higher by 10-15 basis points in the second quarter and through the year, there will be more improvement."

The bank launched a brokerage business some months earlier and might also soon apply for a licence for a fund house. “The brokerage is still very nascent but so far, so good. We only have a direct broking model. We have not made the application for the fund house but the plan is mostly (for an) inorganic opportunity, as and when it happens. It is very difficult to time that,” said Monga.

Gross non-performing advances as a proportion of gross advances were 0.33 per cent, while the net non-performing asset (NPA) ratio was 0.07 per cent as on June 30. “Both are two-three basis points higher than what was reported in the end-March quarter,” said Monga. The loan loss provision coverage was 78.4 per cent as on June 30.

“The fresh slippages during the quarter are Rs 110 crore and we also have about Rs 80 crore of recoveries and upgrades in the NPA position. The net slippage is about Rs 25 crore. The fresh slippages are either from mid-corporates or small and medium enterprises. We should not see acceleration trends in NPAs. But there might be instances of not so healthy loans becoming NPAs,” said Monga.

Total restructured addvances were Rs 113 crore as on June 30 and this was 0.19 per cent of gross advances, down from 0.29 per cent a year before. There was no sale to asset reconstruction companies during the quarter.

Total advances grew 23.2 per cent to Rs 58,989 crore and total deposits grew 16.6 per cent to Rs 76,103 crore. Current and savings account (Casa) deposits grew 29 per cent to Rs 16,975 crore, taking their ratio to 22.3 per cent of all deposits as on June 30, up from 20.2 per cent a year before.

By the Basel-III rule, tier-I capital was 12.6 per cent and the total capital adequacy ratio 18 per cent as on June 30.

On Wednesday, the board of directors approved the raising of Rs 3,000 crore of long-term bonds and the bank now intends to seek shareholders' approval. “The amount will be raised in the next 12 months,” said Monga.

The bank shall be opening an office in Abu Dhabi this quarter.