Yes Bank Q1 profit quadruples as NPA additions slow

Mumbai Yes Bank's net profit quadrupled led by a sharp increase in other income and a fall in provisions as the pace of additions in non-performing assets (NPAs) slowed. Net profit increased to Rs 207 crore in the quarter ended June 2021, the highest since the quarter ended December 2018 from Rs 45 crore a year earlier and was in contrast with the Rs 678 crore loss predicted by a Bloomberg poll of analysts.

Profits were helped by a 70 per cent growth in non-interest income to Rs 1056 crore up from Rs 621 crore a year ago which included fees from retail and corporate banking, forex, debt capital markets and recoveries from written-off accounts.

Provisions fell 41 per cent year-on-year to Rs 644 crore from Rs 1087 crore, a year earlier as gross NPAs fell to 15.60 per cent from 17.30 per cent a year ago as recoveries and upgrades matched fresh slippages during the quarter.

Recoveries and upgrades at Rs 2000 crore included cash recoveries of Rs 602 crore. Total slippages were at Rs 2233 crore during the quarter. Loans due beyond 61 days but below the NPA cut-off of 90 days declined by Rs 1250 crore.

CEO Prashant Kumar said that the bank is on course to meet its targeted cash recoveries of Rs 5000 crore this fiscal.

"We have said in December that we are at the end of our cycle in terms of NPAs. From here on we expect recoveries and upgrades to outpace slippages. Of course nobody is insulated from further disruptions due to Covid 19 but with 85 per cent of our retail and SME portfolio secured we do not see that much of a risk," Kumar said.

Despite the rise in profits Yes Bank's loan book shrank 0.5 per cent to Rs 1.63 crore as the corporate book which makes up 47 per cent of the bank's loans continued to decline. Net interest income fell 27 per cent year on year.

Retail and SME book grew 23 per cent. Kumar said he still continues to expect a 15 per cent growth in loans during the fiscal led by a 20 per cent growth in retail and SME loans and a 10 per cent growth in corporate loans.

Total restructured loans at the end of the quarter stood at Rs 4976 crore our of which about 80 per cent or Rs 3300 crore were linked to the Covid 19 pandemic.

Kumar said the bank does not expect to add any large accounts to the restructured pool by the end of September 2021, the end if the RBI's window for restructuring.