July 20th 2024.
In a recent financial report, Mumbai-based private sector lender Yes Bank announced a significant 46.7 per cent increase in net profit for the quarter ending in June 2024, reaching a total of Rs 502 crore. This growth was largely attributed to a reduction in provisions, allowing the bank to see a boost in core net interest income of 12.2 per cent, amounting to Rs 2,000 crore. The bank's net interest margin remained stable at 2.4 per cent.
Notably, the bank also saw a notable increase of over 20 per cent in deposits, a promising sign in an industry that has been struggling in this area. Additionally, the bank reported a 5.1 per cent growth in other income, reaching Rs 1,141 crore during the quarter.
One of the key factors contributing to the bank's success was a significant decline of 41.2 per cent in overall provisions, amounting to Rs 212 crore. A senior official credited this decrease to successful recoveries on bad assets that were transferred to JC Flowers Asset Reconstruction Company. The bank also saw a writeback of Rs 318 crore on provisions for investments, and an increase in provisions for taxation and non-performing assets.
While the overall gross non-performing asset ratio remained steady at 1.7 per cent, the bank did acknowledge some stress in the unsecured advances portfolio. This has led to a cautious approach in that segment, particularly in regards to advances overdue for between 61-90 days. However, the bank expressed confidence in improving this area in the next two quarters.
Looking ahead, Yes Bank's Managing Director and CEO, Prashant Kumar, revealed the bank's target of 16-17 per cent loan growth for the fiscal year of 2025. This growth will largely come from the mid-market and small business segment, with a smaller portion from larger corporate balances. Kumar also reported that the bank has achieved its target for priority sector loans for the June quarter.
In terms of expansion, the bank plans to open up to 50 new branches in FY25, having already successfully launched 140 branches in the past 18 months. With an overall capital adequacy of 16.5 per cent and core buffers at 13.6 per cent, the bank is well-positioned for future growth.
When asked about recent media reports on a potential stake sale by its largest owner, SBI, and whether the bank has received RBI approval for the sale, Kumar declined to comment. However, the bank did reveal plans to reduce its share in the rural infrastructure development fund balance from 25 per cent to below 5 per cent in the next three years, with the remaining balance being spread out over the next 2-3 years.
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