YES Bank’s profit after tax for Q4 fell 45 per cent YoY to ₹202 crore, owing to accelerated provisions made by the bank during the quarter. Sequentially, the net profit was three-fold higher. The net profit for FY23 was ₹717 crore — also lower by 33 per cent on year.

Provisions for the quarter were ₹618 crore ( ₹271 crore), and for FY23 were 50 per cent higher at ₹2,220 crore.

“The higher provisioning is mainly on our loans and security receipts (SRs),” MD and CEO Prashant Kumar said in the post earnings call, adding that with the share of SRs as a portion of NPAs having come down to 2.4 per cent from 4.8 per cent last year, provisioning requirements are expected to trend lower.

The bank is not likely to see any major impact from ageing-related provisioning till FY26. YES Bank will need to make ageing provisions of 80 bps in FY24 and 100 bps in FY25 beyond the general provisions for fresh slippages, Kumar said. He added that the lender will also not need to make any additional provisions for the ongoing legal dispute over writing down of the bank’s AT1 bonds in March 2020.

Loan book

YES Bank’s net advances grew 12 per cent YoY and 5 per cent QoQ to ₹2-lakh crore. Retail and SME loans comprised 59 per cent of loans, mid corporate loans 14 per cent and corporate loans 27 per cent as of March 31. The lender disbursed loans of around ₹1-lakh crore in FY23.

The muted growth on the corporate side is because the bank has been consciously looking to make the loan book more granular and because the bank is “unable to meet the pricing expectations of good customers”, Kumar said, adding that an overall basis too the bank remains cautious of the current macro scenario.

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He pegged loan growth for FY24 at 15-20 per cent, within which the retail book is seen growing over 30 per cent and large corporate book at around 5 per cent after de-growing 26 per cent in FY23.

Slippages down

Slippages for the quarter fell to ₹ 1,196 crore, lower than ₹1,610 crore in Q3. Of the Q4 slippages, ₹250 crore were technical NPAs which the bank had to downgrade due to the entities not meeting regulatory financial ratios even though they were paying borrower accounts, Kumar said.

FY23 slippages, too, trended lower to ₹4,775 crore from ₹5,795 crore. Recoveries and upgrades for the quarter were ₹1,733 crore.

Kumar said he expects slippages to trend lower even as recoveries are seen sustaining at around ₹5,000 crore in FY24 and credit costs staying low.

Gross NPA ratio of the bank was at 2.2 per cent , slightly worse than 2 per cent last quarter but significantly better than 13.9 per cent a year ago. The net NPA ratio at 0.8 per cent was better than both 1 per cent in the previous quarter and 4.5 per cent last year.