The net profit for the January-March quarter fell by over 45% year over year at India’s Yes Bank due to higher provisions for bad loans and security receipts.
From 3.67 billion Indian rupees in the same time a year prior, net profit decreased to 2.02 billion rupees ($24.63 million) for the reporting quarter. Due to a low base in the prior period, net profit was three times larger than it was in the previous quarter.
Refinitiv data shows that profit was much lower than the analysts’ projected 2.88 billion rupees.
Provisions and contingencies at Yes Bank climbed from 2.71 billion rupees a year earlier to 6.18 billion rupees.
In the December quarter, the gross non-performing asset (NPA) ratio increased to 2.02% from 2.17%.
Compared to a year ago, the gross NPA ratio decreased from 13.93%. In an effort to improve its balance sheet, Yes Bank completed the transfer of problematic loans totaling 480 billion rupees ($5.9 billion) to private equity company J.C. Flowers in December.
The net NPA ratio decreased from 1.03% in the previous three months to 0.83%.
Prashant Kumar, managing director and chief executive, told reporters during a conference call that the bank will have an ageing provisioning requirement of 80 basis points this fiscal year and 100 basis points in 2024–25 based on the existing NPA and security revenues.
According to Kumar, the bank has over 44 billion rupees in provisions for the 76.66 billion rupees in unpaid security receipts.
He added that there would also be a provisioning requirement for any new slippage.
The difference between interest earned from lending and interest paid to depositors, or net interest income, for Yes Bank increased 15.7% to 21.05 billion rupees. A crucial measure of a bank’s profitability, the net interest margin (NIM), increased from 2.50% to 2.80% in the previous year.
Net advances for the private lender increased by 12.3% year over year, driven by retail loans, while deposits increased by 10.3%.
According to Kumar, Yes Bank plans to increase loan by 15% to 20% in 2023–2024 while reducing slippages and enhancing NIM. He continued by saying that the lender has no plans to raise capital this fiscal year.