YES Bank Q3 net down 80.7% at Rs 52 crore as ageing bad loan hurt

YES Bank net profit declined by 80.7 per cent year-on-year (YoY) to Rs 52 crore during the quarter ended December (Q3 of FY23) on increase in provisions for ageing bad loans.

The Mumbai-based private sector lender had posted a net profit of Rs 266 crore in Q3 of FY22. Net profit was lower in Q3FY23 compared to Q2FY23 when the figure stood at Rs 153 crore.

The bank’s stock had closed 1.74 per cent closer at Rs 19.8 per share on the BSE on Friday.

Total capital adequacy ratio (CAR) stood at 18 per cent in December 2022.

Referring to High Court judgement on AT1 bonds Prashant Kumar, its managing director and chief executive said the total capital adequacy ratio would not be impacted by Bombay High Court’s (HC) verdict striking down the cancellation of Additional tier I (AT1 bonds) worth over Rs 8,000 crore. Bank has preferred to go on appeal at the Supreme Court. HC has granted a six week stay on operation of its order.

In an extreme case scenario, when AT1 bonds are restored, Common Equity tier I (CET1) may come down and AT1 will go up, Prashant said in media interaction post Q3FY23 results.

YES Bank’s net interest income (NII) was up 11.7 per cent YoY in Q3 to Rs 1,971 crore. Sequentially, NII declined from Rs 1,991 crore in Q2FY23.

Its Net Interest Margin (NIM) improved to 2.5 per cent in Q3 from 2.4 per cent in Q3FY22. Sequentially, NIM declined from 2.6 per cent in Q2FY23. Kumar said it would be difficult to give guidance on margins (NIMs) due to pressure from pricing deposits.

The lender's non-interest income rose 55.8 per cent YoY to Rs 1,143 crore during the quarter under review. Sequentially, it rose from Rs 920 crore during the quarter ended September 2022.

The provisions and contingencies surged by 125.5 per cent YoY to Rs 845 crore as bank set aside money for ageing bad loans.

Asset quality profile improved with gross non-performing assets (GNPAs) at 2 per cent in December 2022, compared with 14.7 per cent a year ago. Sequentially, GNPAs were down from 12.9 per cent in September 2022.

Net NPAs dipped to 1.0 per cent from 5.3 per cent a year ago. Sequentially, they improved from 3.6 per cent in July-September 2022.

The provision coverage ratio (PCR) stood at 49.04 per cent for the quarter under review from 67.5 per cent a year ago. Sequentially, it declined from 74.7 per cent in July-September 2022.

On the business expansion front, the bank’s loan book grew by 10.4 per cent YoY to Rs 1.94 trillion for the Q3. Bank has maintained guidance of 15 per cent growth in loans for FY23, Kumar said.

The deposits grew by 15.9 per cent YoY to Rs 2.13 trillion in October-December 2022. The share of low-cost money, current account and savings account (CASA) deposits, declined to 29.9 per cent at end of December 2022 from 31 per cent in July-September 2022 and 30.4 per cent a year ago. Bank dispensed with earlier guidance of CASA share of 35 per cent by March 2023, given the current situation (rising rates).