YES Bank posted a 10.3 per cent y-o-y increase in its net profit for Q1FY24 at ₹343 crore, largely led by strong growth in its non-interest income and retail loans. Sequentially, the profit-after-tax was 69 per cent higher.

Other income was up 54 per cent y-o-y and 14 per cent q-o-q at ₹1,141 crore, driven by third-party sales and trade and remittance fees.

Net interest income (NII) was up 8.1 per cent yoy at ₹2,000 crore. Net interest margin (NIM) for the quarter was at 2.5 per cent, up 10 bps on year.

In the earnings call, MD and CEO Prashant Kumar said he expects NIM compression to continue in Q2 due to deposit repricing but stabilise thereon.

Advances up

Net advances were up 7.4 per cent y-o-y at ₹2 lakh crore. Advances of the bank grew 10 per cent y-o-y adjusting for sale to asset reconstruction companies (ARCs). The increase was led by 31 per cent growth in retail advances, 24 per cent in SME loans and 29 per cent in mid-corporate loans.

Kumar said large corporate loans contracted 29 per cent y-o-y and 9 per cent q-o-q, largely due to higher-than-expected repayments of ₹3,000 crore, barring which the portfolio grew 15 per cent y-o-y.

Pricing mismatch amid intensified competition also led to slower growth in large corporates. However, the non-fund based book grew 12 per cent y-o-y and 4 per cent q-o-q and the bank will look to grow both fund-based and non-fund based portfolios going ahead.

YES Bank is looking at loan growth of 15-20 per cent for FY24, wherein the bank expects de-growth on the corporate book and 25-30 per cent growth in retail, SME and mid-corporate segments.

Retail disbursements for the quarter were ₹12,000 crore, SME for ₹6,700 crore, mid-corporate at ₹1,300 crore and large corporate disbursements at ₹4,700 crore, Kumar said.

Asset quality

Slippages for the quarter were ₹1,430 crore, higher than both ₹1,196 crore a quarter ago and ₹1,072 crore a year ago.

Net of recoveries and upgrades, the slippages were ₹764 crore, in line with ₹740 crore last quarter, Kumar said, adding that slippages were elevated due to one large real estate SMA-2 account of ₹400 crore turning bad during the quarter. He pegged slippage ratio for the year at 2-2.5 per cent.

He added that overall resolution momentum remains strong, with the bank seeing recoveries and upgrades of ₹1,201 crore in Q1 of which ₹425-450 crore were against security receipts (SRs).

YES Bank is aiming for total recoveries of ₹5,000 crore in FY24, of which over ₹2,000 crore are seen coming from SRs. The bank had a total SR book of ₹2,600 crore at the end of June, with a face value of over ₹5,200 crore.

Gross NPA ratio of the bank improved significantly to 2 per cent as of June 30 from 13.4 per cent a year ago and slightly better than 2.2 per cent last quarter. Net NPA ratio was at 2.4 per cent, flat from a quarter ago.

Deposits of the bank were up 13.5 per cent y-o-y to ₹2.2 lakh crore led by 23 per cent growth in retail deposits even as the bank is going slower on high cost corporate deposits as a strategy. The bank also saw a sequential decline in CASA deposits which Kumar attributed to a fall in high-value savings deposits and customer preference for higher yielding fixed deposits. CASA ratio was at 29.4 per cent on June 30, lower than 30.8 per cent both a quarter and year ago.

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