Yes Bank Q1 net profit rises 10% on higher interest income

Yes-BankMumbai: Private sector lender Yes Bank on Wednesday said it has reported a 9.6 percent jump in its net profit at Rs 439.5 crore for the first quarter ended June 2014, driven by higher net interest income.

The bank had reported a profit after tax of Rs 400.8 crore in the year ago quarter.

"Profits were higher, driven by a 13 percent increase in net interest income," Yes Bank Chief Financial Officer Rajat Monga told reporters here.

He said the profit would have been higher by around 10 percent in Q1 had it got the similar gains it had realised on account trading in the year ago quarter.

"We had booked about Rs 100-125 crore of gains on account of interest rates falling, resulting from price improvement in government securities and corporate bonds. That opportunity was not present this year," Monga said.

Net interest income, which is the interest earned minus interest paid, grew 13.1 percent to Rs 745.3 crore in the reporting quarter as against Rs 659.1 crore year ago.

Net interest margin, the spread between what it pays on deposits and what it earns from on-lending, remained stable at 3 percent.

"Margin will continue to be stable with marginally biased towards improvement. As the casa position improves, we will hopefully report a 10-15 basis points jump in margins in the next quarter as we have raised equity," Monga said.

The bank raised USD 500 million through qualified institutional placement in May this year.

In the quarter, the bank saw its asset quality deteriorating, with gross non performing assets rising to 0.33 percent from 0.22 percent, and net NPAs at 0.07 per cent as against 0.03 percent last year.

"I don't see a trend (in NPAs) of rising further. We see a trend of stable to lower NPAs going forward," Monga said.

The bank's scrip ended 1.72 percent down at Rs 536.65 on the BSE today.

Fresh slippages in the period stood at Rs 110 crore and recoveries and upgrade were at Rs 80 crore. Total restructured advances as of June 30 were Rs 113.1 crore.

The bank did not sell any bad assets to asset reconstruction companies in the quarter, Monga said.

It made a provision of Rs 19 crore for unhedged forex exposure during the quater.

Motilal Oswal Securities vice president - equity advisory group Rahul Shah said, "Yes Bank's Q1 earnings were broadly in line with estimates. The bank has a well-laid strategy for growing small business loans (most of which qualify as priority sector loans) and cross-selling to acquired customers which would help granular retail fees growth."

Total advances rose 23.2 percent to Rs 58,988 crore, while deposits grew 16.6 percent to Rs 76,102.8 crore as of June 30, 2014.

The bank's balance sheet grew by 8.9 percent to Rs 109,743.3 crore as of end June.

The bank's capital adequacy ratio stood at 18 percent as of June 30, with Tier I capital at 12.6 percent.

The city-based bank also received its board's approval to raise Rs 3,000 crore through long term bonds for financing of infrastructure and affordable housing.

It would now seek shareholder approval for the same, Monga added. --- PTI