YES Bank Q3 results: Lender swings to profit, but stress bottled by SC standstill

Yes Bank swung to a profit of Rs 151 crore in the quarter ended December 2020 from a loss of Rs 18,560 crore a year earlier and up from Rs 129 crore in September 2020, led by higher loans disbursements to individuals and small and medium enterprises along with a strong growth in fees and trading income.

The bank disbursed Rs 12000 crore in the quarter ended Decemeber almost double the Rs 6800 crore disbursed in the preceding quarter as its loan book is slowly building up from the stress seen a year earlier.

Total loan book at Rs 1.69 lakh crore was close to Rs 1.71 lakh crore reported in March 2020. Retail loans now constitute 28% of the bank's loan book up from 24% a year earlier.

"Retail loans is our focus and we expect it to continue growing quicker at 20% vesus 15% for SMEs and 10% for corporate loans in the new fiscal starting April," said Prashant Kumar, CEO Yes Bank.

Stronf retail loan growth helped increase net interest income (NII) by almost 1.5 times to Rs 2,560 crore from Rs 1065 crore a year earlier. Non interest income including fees and treasury income doubled to Rs 1197 crore from Rs 626 crore a year earlier, including Rs 529 crore from the sale of some bond investments.

Though net interest margin improved to 3.4% from 1.4%, CEO Kumar said some interest income will have to be reversed after the Supreme Court lifts its stay on classifying NPAs.

"Our sustainable NPAs are somewhere close to 3% because there could be some reversals after the court order," Kumar said.
Though gross NPAs reduced to 15.4% from 16.9% in September Kumar said NPAs could be close to 20% taking into account the Rs 8000 crore book the bank has restructured and another Rs 1200 crore which has not yet been classified as NPAs.

The bank increased its Covid 19 related provision to 2,683 crore from Rs 1,918 crore in September but CEO Kumar expressed confidence that a quicker than expected economic recovery will help in keeping NPAs under check.

Lower operating expenses, down 13% from a year earlier, to Rs 1,472 crore, also helped boosting the bottomline. Kumar said the work from home modele envisaged by the bank will reduce occupancy at its corporate office by 31% and help save Rs 20 crore per annum.

Yes Bank also recovered Rs 1512 crore in the quarter taking its total recoveries during the fiscal to Rs 2947 crore.

The bank has also taken an enabling board approval to raise Rs 10,000 crore from the equity and debt markets and will soon take shareholder approval for the same.