Private sector lender YES Bank on Wednesday reported a net profit of R439.5 crore for the quarter ended June 30, 2014, up 9.6% y-o-y, boosted by net interest income and growth in advances.
Net interest income stood at R745.3 crore, up 13.1% y-o-y, and as a result, the bank was able to maintain its net interest margins (NIMs) at 3%, the same as the preceding quarter. Rajat Monga, chief financial officer, said NIMs could move up by 10-15 bps in the coming quarter. We will, hopefully, report a jump in margins in the next quarter because of the equity that we raised and it will have a one-time impact on margins because we have zero-cost funds in the book, he said.
In the reporting period, YES Bank raised equity capital worth $500 million, or R2,941 crore, via global qualified institutional placement.
However, the lender reported a 3.7% y-o-y drop in non-interest income, which Monga attributed to the base effect in Q1FY14, as the bank had extraordinary gains worth R125 crore on the bond portfolio. Correspondingly, the bank posted a 5.3% y-o-y dip in operating profit to R644.2 crore.
The YES Bank scrip ended 1.72% down at R536.65 on the BSE on Wednesday.
Asset quality at the bank deteriorated marginally and gross non-performing assets (NPAs) increased from 0.31% of gross advances in the fourth quarter to 0.33% of gross advances in Q4. Net NPAs stood at 0.07% of net advances, an increase of 2 bps from the preceding quarter. Monga added there were slippages worth R110 crore in the quarter and it made recoveries worth R80 crore.
Total advances were up 23.2% y-o-y to R58,986.6 crore in Q1. Large corporate lending accounted for 68.7% of the advances portfolio. Mid-sized corporate lending accounted for 14.5% and branch banking, which includes retail and MSME lending, accounted for 16.8% of the advances. Total deposits grew 16.6% y-o-y to R76,102.8 crore.
YES Bank is also seeking shareholder approval to issue long-term bonds of R3,000 crore for financing of infrastructure and affordable housing, in line with a recent RBI guideline in this regard. About 50-100 bps is the cost benefit we will be able to pass on to the customer. But there is a benefit with the reserves on them being zero and exempt from priority sector lending, Monga said.