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Yes Bank said on Wednesday that it plans to raise $500 million in capital by the second half of 2011-12 to fuel its fast growing business.
The options for raising funds include a Qualified Institutional Placement, a Follow-on Public Offer or an international offering, such as Global Depository Receipts/American Depository Receipts, and will be decided by the bank's capital raising committee.
“We would need to raise capital this year if we do as well as the previous fiscal. The board has passed a resolution to raise $500 million. In all probability and given the market condition, it will be in the second half of the fiscal,” said Mr Rana Kapoor, MD and CEO, Yes Bank, while announcing the results for the quarter ending March 31, 2011.
He added that the promoter shareholding of 26.6 per cent would come down as the bank looks to raise fresh capital.
A new high
The six-year-old private sector lender posted a 45 per cent growth in its profits for the fourth quarter — it's highest ever for a similar period. Total income for the three months rose 71 per cent to Rs 1,409 crores.
The strong performance is on the back of 55 per cent growth (Rs 34,364 crores) in advances and a 71 per cent growth (Rs 45,939 crores) in deposits. Net Interest Margin (NIM) stood at 2.8 per cent in the period. This has made the bank the fourth largest private sector lender in India, it said.
For the full fiscal 2010-11, Yes Bank's profits rose 52 per cent to Rs 727 crores, while the total income increased 58 per cent to Rs 4,665 crores. NIM for the year was at 2.9 per cent.
The outlook
Speaking on an outlook for the year, Mr Kapoor said that interest rates should be flat or come down over the medium and long term. “If the interest rate softens, NIM of 2.8-3 per cent can be achieved. But, a 0.5 per cent rate hike is inevitable in the next six months,” he said.
The bank is also planning to expand its retail loan portfolio, especially in consumer loans, equipment and commercial vehicle loans. In the previous fiscal, the contribution of retail business stood at 12 per cent, which the bank is trying to increase to 30 per cent by 2015. It is also aiming at a 35 per cent increase in both loans and advances in the current year.
Mr Kapoor also said that the central bank is expected to raise repo rates by 25 basis points in the upcoming policy review on May 3. “The policy rates are expected to converge with the inflation rate for the year. We will see some inflation correction,” he said.
Yes Bank shares on the BSE went up 2.18 per cent to Rs 330.55 on Thursday.
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