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YES Bank’s profit after tax (PAT) fell 32 per cent y-o-y to ₹153 crore in Q2FY23, also lower by 51 per cent sequentially, largely owing to ageing-related provisioning requirements during the reporting quarter.
These provisions largely pertained to two accounts aggregating to nearly ₹750 crore, the bank said, adding that one of these accounts also constituted bulk of the NPA provisions of ₹525 crore during the quarter.
The bank also made provisions of ₹300 crore against security receipts, taking total provisions for the quarter to ₹638 crore, up 41 per cent y-o-y and 128 per cent q-o-q.
The lender saw reduction in slippages to ₹896 crore, down 16 per cent q-o-q, leading to better asset quality — also aided by upgrades of ₹125 crore and recoveries of ₹1,461 crore, with the bank saying it is on track to meet the FY23 guidance of recoveries and upgrades worth ₹5,000 crore.
Gross NPA ratio improved to 12.9 per cent from 13.4 per cent a quarter ago and 15 per cent a year ago. Net NPA ratio fell to below 4 per cent for the first time since September 2019 to 3.6 per cent, better than 4.2 per cent in the previous quarter and 5.5 per cent in the previous year.
Operational metrics
Advances for the lender were 11.3 per cent higher y-o-y and 3.2 per cent q-o-q to ₹1.9 lakh crore at the end of September. The muted growth was largely due to slowing growth in the bank’s corporate portfolio, the share of which fell to 34 per cent of total loans from 38 per cent in the previous quarter.
In the post earnings call, MD and CEO Prashant Kumar said that this was due to some scheduled repayments from corporates and due to the bank’s focus on retail and SME loans with the aim of granularising the portfolio. He added that retail loans are also higher yielding at the moment whereas pockets of the wholesale segment don’t make commercial sense for the bank from a pricing perspective.
While future loan growth will largely be from retail, MSME and mid corporates segments, the bank does not expect to see further rundown in the corporate book, Kumar said.
Net interest income was 32 per cent y-o-y and 8 per cent q-o-q to ₹1,991 crore. Net interest margin for the quarter was at 2.6 per cent, up 40 bps y-o-y and 20 bps q-o-q. Kumar said he does not expect NIMs to compress going forward as most of the increase in cost of deposits will be passed to customers.
YES Bank’s deposits grew 13 per cent y-o-y and 4 per cent q-o-q to ₹2 lakh crore, of which low-cost CASA deposits accounted for 31 per cent.
Kumar said that deposit accretion is going to be a challenge for the sector in the coming months as more savers are moving from savings accounts to FDs due to higher rates. However, the bank will continue to look improve its CASA ratio, aiming for 35 per cent share by the end of FY23.
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