Private sector lender Yes Bank on Wednesday said it has reported a 9.6 per cent 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 per cent increase in net interest income,” Yes Bank chief financial officer Rajat Monga told reporters in Mumbai.
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He said the profit would have been higher by around 10 per cent 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,” Mr. Monga said.
Net interest income, which is the interest earned minus interest paid, grew 13.1 per cent to Rs. 745.3 crore in the reporting quarter as against Rs. 659.1 crore year ago.
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Net interest margin — the spread between what it pays on deposits and what it earns from on-lending — remained stable at 3 per cent.
“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,” Mr. Monga said.
The bank raised $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 per cent from 0.22 per cent, and net NPAs at 0.07 per cent as against 0.03 per cent last year.
“I don’t see a trend (in NPAs) of rising further. We see a trend of stable to lower NPAs going forward,” Mr. Monga said.
The bank’s scrip ended 1.72 per cent down at Rs. 536.65 on the BSE on Wednesday.
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, Mr. Monga said.
It made a provision of Rs. 19 crore for unhedged forex exposure during the quarter.
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 per cent to Rs. 58,988 crore, while deposits grew 16.6 per cent to Rs. 76,102.8 crore as of June 30, 2014.
The bank’s balance sheet grew by 8.9 per cent to Rs. 109,743.3 crore as of end June.
The bank’s capital adequacy ratio stood at 18 per cent as of June 30, with Tier I capital at 12.6 per cent.
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, Mr. Monga added.