Yes Bank, a city-headquartered private sector lender, has reported a significant increase in its net profit for the September quarter. The bank’s net profit rose over 47% to Rs 228.64 crore, compared to Rs 160.41 crore in the same period last year. However, it was lower than the previous quarter’s profit of Rs 347 crore.
Despite an 11.2% loan growth, the bank’s core net interest income for the reporting quarter was Rs 1,925 crore. The management attributes the fall in income to a 0.30 percentage point compression in the net interest margins (NIM) to 2.3%. The NIMs were impacted the repricing of past deposits and shortfalls in the priority sector lending targets.
Prashant Kumar, the managing director and chief executive of Yes Bank, mentioned that the bank is nearing the end of the slip in NIMs and aims to expand further. The impact of deposit repricing will not be repeated, and the bank plans to purchase Priority Sector Lending (PSL) certificates from the market to meet sub-targets on lending.
Yes Bank is also considering acquiring a microlender, although no concrete details have been disclosed yet. The bank aims for a 15% loan book growth and an 18% expansion in deposits for FY24.
Addressing concerns about unsecured loans, such as credit cards and personal loans, Kumar stated that the bank has witnessed increased delinquencies in the portfolio, particularly in assets overdue for over 30 days. The gross non-performing assets (NPAs) from unsecured loans stood at 2.1%, higher than the retail NPAs of 1.4% and the overall NPAs of 2% for the bank.
In light of the higher stress on unsecured loans, the bank plans to exercise caution in its retail assets growth strategy and reach an optimum level of 48% contribution of retail in the overall assets mix. In the September quarter, two-thirds of the fresh slippages of Rs 1,200 crore were from retail loans, while corporate loans performed well.
The bank’s overall provisions for the quarter were Rs 505 crore, compared to Rs 583 crore in the same period last year. Despite this, the bank maintains its guidance on the overall credit costs.
Yes Bank intends to open another 150 branches in FY24, with 20 branches already opened. Its overall capital adequacy ratio was 17.1% as of September 30, 2023, and there are no plans for a fund raise at the moment, according to Kumar.