YES Bank Q2 Results: Profit Doubles As Provisions Dip, Asset Quality Improves

Yes Bank Ltd. more than doubled its earnings in July-September 2024 as provisions fell and asset quality improved.

Net profit of the private lender stood at Rs 553 crore in the three months ended Sept. 30, as against Rs 225 crore in the year-ago period, according to an exchange filing on Saturday. At the same time, the net interest income grew 14% year-on-year to Rs 2,200 crore.

The lender's net interest margin stood at 2.4%, as against 2.3% in the year-ago period. Provisions fell 41% year-on-year to Rs 297 crore.

In a post earnings call, Yes Bank said that it has managed to maintain its margins despite a "difficult interest rate scenario". Margins are likely to improve once the retail loan book picks up, the lender said, but declined to provide any guidance.

The Reserve Bank of India's circular on penal charges had a minimal impact on the bank's NII, the management said.

Asset Quality

The quarterly performance came on the back of improving asset quality.

As on Sept. 30, Yes Bank's gross non-performing assets ratio stood at 1.6% as against 1.7% in April-June. The net NPA ratio remained flat sequentially at 0.5%.

During the second quarter, gross slippages stood at Rs 1,314 crore, higher than Rs 1,263 crore a year ago and Rs 1,204 crore a quarter ago.

The bank's management believes that slippages are near its peak and may remain range bound in the next two quarters. A slide is likely thereafter.

Credit cost remained benign at 0.3% of average assets on annualized basis.

Loan Book

Net advances grew 12% year-on-year and 2% sequentially to Rs 2.35 lakh crore. The small and mid-corporate loan book grew 26% and that for large corporates was up 22%. The retail loan book was little changed.

The retail, SME and mid-corporate loan mix stood at 59:16:25 in Q2 FY25 as against 60:15:25 a quarter ago and 61:14:25 a year ago.

The bank expects loan growth to see an uptick in the second half of the current fiscal. The bank's loan book recalibration strategy from retail book towards segments that offer high return on assets, the management said.

Yes Bank said that it remains watchful of the unsecured loan book. Any growth here would depend on the behaviour. Going forward, the lender expects to see 20-21% growth in the unsecured segment but isn't looking to accelerate the pace of the growth.

Deposits

Total deposits rose 18% year-on-year and nearly 5% sequentially to Rs 2.77 lakh crore. The current account savings account, or CASA, ratio was at 32% in the second quarter as against 29.4% in the year-ago period and 30.8% a quarter ago.

The credit-to-deposit ratio of the bank was 84.8% as on Sept. 30, as against 89.2% a year ago and 86.6% a quarter ago.

CEO Prashant Kumar maintained Yes Bank's credit and deposit growth guidance at 12-14% and 17-18%, respectively.

When asked if the bank has put its plans of acquiring microfinance institutions on the back burner due to recent delinquencies in the segment, Kumar said that the bank continues to explore the space, and that the time is right for an acquisition.