YES Bank Q2 beats street, net up 21% on NII & other income

Moneycontrol Bureau

Private sector lender YES Bank's second quarter (July-September) net profit grew 21.2 percent - better than analysts' forecast - year-on-year to Rs 371 crore, driven by strong growth in net interest income and other income.

Net interest income (NII) rose 28.2 percent to Rs 672 crore during September quarter from Rs 524.2 crore in a year ago period, beating analysts' expectations.

"Growth in NII was on account of a cautious and steady growth in advances & investments coupled with stable net interest margin at 2.9 percent (3 percent in June quarter)," the company said.

According to a CNBC-TV18 poll, analysts on an average had expected the bank to report net profit of Rs 337 crore and net interest income of Rs 658 crore for the quarter.

Other income or non interest income grew 61.6 percent on yearly basis to Rs 446 crore in second quarter on continued growth financial advisory, financial markets, transaction banking, and retail banking fees.

"Financial markets included one-off gain of Rs 111.6 crore in September quarter due to mark-to-market gains on interest rate swaps," the company said in its release.

Provisions and contingencies jumped to Rs 179 crore in September quarter from Rs 31.7 crore in a year ago period and Rs 97 crore in June quarter. Provision coverage ratio of the bank stood at 85.3 percent.

"The bank has maintained robust asset quality retaining high specific provision coverage, while further adding to the reservoir of counter cyclical provisions," YES Bank added.

Gross non-performing assets (NPAs) as a proportion of gross advances increased to 0.28 percent (0.22 percent in Q1FY14 and 0.24 percent in Q2FY13) while net NPAs stood at 0.04 percent (0.03 percent in Q1FY14 and 0.05 percent in Q2FY13) during September quarter.

Total restructured advances (excluding NPAs) were Rs 125.5 crore as on September 30, which represents 0.26 percent of the gross advances down from 0.46 percent in a corresponding period of last fiscal. "There were no fresh restructurings during the quarter."

Rana Kapoor, MD & CEO, said fresh slippages in second quarter were Rs 150 crore.

Total advances of the private sector lender rose 13.6 percent year-on-year to Rs 47,717.2 crore while deposits grew 29.2 percent to Rs 67,575.1 crore in second quarter.

Current and savings account (CASA) deposits increased 52.5 percent on yearly basis to Rs 13,776 crore, with this CASA ratio rose to 20.4 percent as on September 30 from 17.3 percent in a year ago period.

"The bank maintained its growth in infrastructure with branch network crossing the 500-mark milestone, complemented by over 1100 ATMs. Consequently, the bank improved its CASA ratio, significantly added to the overall deposit base, improved the overall granularity of deposits, and maintained net interest margin despite challenging interest rate and liquidity environment," Rana Kapoor elaborated.

He expects 20-22 percent credit growth in October-March period of FY14 and 18-20 percent in third quarter.

The bank has fully recognised depreciation of Rs 112.6 crore on its AFS/HFT bond portfolio (corporate & G-securities) during the quarter, instead of distributing the said amount over future quarters.

It also transferred eligible SLR securities worth Rs 94 crore from available for sale (AFS) category to held-to-maturity (HTM) category at book value with Rs 0.33 crore of losses.

"Had this transfer not been made, the bank’s net depreciation charge would have been higher by Rs 9.4 crore in the quarter gone by and net profit would have been lower by Rs 6.2 crore," YSE Bank elaborated.

Capital adequacy ratio (as per Basel III) stood at 13.8 percent during September quarter as against 14.4 percent in June quarter.

At 14:32 hours IST, the stock was trading at Rs 369.60, up 3.14 percent from previous close on the Bombay Stock Exchange..