Yes Bank Q4 Results: Profit More Than Doubles On Higher Other Income, Lower Provisions

Private lender Yes Bank Ltd.'s net profit rose in the fourth quarter of fiscal 2024 on higher other income and lower provisions. It also beat analysts' estimates.

The standalone net profit increased 123% year-on-year to Rs 452 crore for the quarter-ended March, according to an exchange filing on Saturday. Analysts polled by Bloomberg estimated a net profit of Rs 305.90 crore.

Sequentially, the net profit was up 95.2%.

Net interest income, or core income, for the lender stood at Rs 2,153 crore, up 2.2% year-on-year. Other income rose 56.2% year-on-year to Rs 1568.6 crore, bolstering the bottomline.

The other income included fees and commissions earned from guarantees and letters of credit, loans, and financial advisory fees, according to a statement sent to the stock exchanges.

Yes Bank Q4 Results Highlights (Standalone)

• Net profit up 123% to Rs 452 crore vs Rs 202 crore (YoY).

• Net interest income up 2% to Rs 2153 crore vs Rs 2,105 crore (YoY).

• Gross NPA at 1.7% vs 2.02% (QoQ).

• NNPA at 0.6% vs 0.9% (QoQ).

The lender's asset quality improved in the quarter, with the gross non-performing asset ratio falling 32 basis points sequentially to 1.7%. The net NPA ratio also improved by 30 bps sequentially to 0.6%, compared with 0.9% in Q3.

Provisions for the quarter fell 23.7% year-on-year to Rs 470.8 crore. In the previous quarter, there was a sharp uptick in provisions.

Gross slippages for Yes Bank stood at Rs 1,356 crore, up 9.9% quarter-on-quarter.

Rajan Pental, ED of Yes Bank, told reporters in a post-results media call that the elevated slippages are largely from retail unsecured loans.

The bank is now re-calibrating its core retail strategy as the cost of deposits may remain elevated. The focus would be on affordable housing, auto and used vehicle loans, he said.

"... expect close to 7-8% growth in retail this year," he added.

The lender's operating expenses rose 27% year-on-year to Rs 2,819.1 crore. Of these, the cost ascribed to employees rose 20.1% year-on-year to Rs 1,025.9 crore.

The bank's management, over a media call, told reporters that Rs 190 crore was spent to buy priority sector lending certificates and that's what's sitting in the operating expenses along with an increase in variable compensation. These certificates are used to help banks meet priority sector lending targets.

Net interest margin, a key profitability indicator for the lender, stayed flat sequentially at 2.4% in the quarter ended March.

The bank's Rural Infrastructure Development Fund balances, which account for 11% of its deposit book, were a drag on its net interest margin, according to the management. These are typically high-cost deposits, which are resulting in an impact of about 70 basis points on the bank's NIM currently, according to the management.

The bank is working to reduce the exposure to these deposits but expects the impact to decline over a period of two to three years. Besides these deposits, the bank's retail loan book mix is adding some pressure on margins.

A calibrated approach would help improve NIM by 80–100 bps in the next two to three years, the management said.

The lender's net advances grew 12.1% year-on-year to Rs 2.27 lakh crore. Here, retail advances rose 15.5% year-on-year to Rs 1.05 lakh crore, small and medium enterprise loans were up 25.6% year-on-year to Rs 35,327 crore, and mid-corporate lending was up 27.2% year-on-year to Rs 34,393 crore.

"...we expect corporate advances segment to grow in high single digits going forward," Prashant Kumar, managing director and chief executive officer of Yes Bank, told reporters over the media call.

Total deposits for the bank rose 22.5% year-on-year to Rs 2.66 lakh crore. The CASA ratio for the quarter improved 120 bps quarter-on-quarter to 30.9%. The CASA ratio is the contribution of low-cost current account and savings account deposits as a percentage of overall liabilities. The bank aims to raise this ratio to 40% over the medium term.

The bank expects deposit growth of 18.5% and loan growth of 17% in the current financial year, Kumar said. This loan growth would primarily be driven by MSME and mid-corporate lending, with both contributing more than 25% each to the total lending book.

In March, Yes Bank acquired the majority merchants of Paytm and also became a payment service provider for the company after it got a third-party application provider (TPAP) license for Unified Payments Interface (UPI) payments from the National Payments Corporation of India.

As a result of this partnership, Kumar said that the bank is now handling about 500 crore UPI transactions every month. The bank now boasts a 38% market share in UPI transactions and 55% in terms of collections from merchants.

"...the partnership will give us an advantage in fee income and float in our current account," he told reporters.