Yes Bank Q1 net profit up 33 percent on higher net interest income

Image: Amit Dave / Reuters

Yes Bank’s managing director and CEO Rana Kapoor

Private lender Yes Bank has reported a 32.8 percent year-on-year rise in net profit in the June-ended quarter of FY17, beating market expectations. The earnings were led by a healthy growth in net interest income (NII) and other income. Asset quality for the bank weakened in the three-month period, compared to a year ago.

Yes Bank reported a net profit of Rs 731.8 crore in the first quarter of this fiscal, against Rs 551.2 crore in the year-ago period. Net interest income—the difference between interest earned and interest expended—stood at Rs 1,316.6 crore, up 24.2 percent from a year ago. Other income (non-interest income) rose 65 percent to Rs 900.5 crore in the quarter, compared with Rs 545. 2 crore in the year-ago three months.

Asset quality for the bank, however, weakened in the quarter. Gross NPA, at Rs 844.6 crore, rose 129 percent year-on-year and around 12.8 percent over the quarter ended March 2016. Gross NPA ratio stood at 0.79 percent in the June quarter. Net NPA ratio increased to 0.29 percent in the quarter, from 0.13 percent a year ago. At Rs 302.4 crore, net NPAs were 6.3 percent higher than the March-ended quarter.

Yes Bank’s managing director and CEO Rana Kapoor said: “There was continued resilience in asset quality,” in a media statement issued after the earnings were announced.

There was no sale to asset reconstruction companies (ARCs) in the quarter.

All banks are in the race to clean up their balance sheets and reduce rising levels of NPAs and stressed assets. The Reserve Bank of India (RBI), which has carried out its asset quality review (AQR) has told these banks to clean their balance sheets off these bad assets by March 2017.
 
The bank’s loan book continued to expand. Advances grew 33 percent to Rs 105,942 crore, compared with Rs 79,665 crore a year ago and deposits rose 28.6 percent to Rs 122,851.1 crore, data showed.

Analysts called the earnings positive. Kaitav Shah of SBICap Securities said with high profit growth driven by healthy net interest income and stable asset quality, the impact on the Yes Bank stock is likely to be positive. Yes Bank’s stock edged down 0.01 percent to close at Rs 1,200.10 on BSE after the earnings.