YES Bank Q4 net up 34% on higher interest income

Leading private sector lender Yes Bank on Wednesday reported a forecast beating 34% year-on-year jump in its fourth quarter (Jan-March) net profit to Rs 272 crore, aided by robust interest income. Net interest income or the difference between interests earned and paid out climbed 29% to Rs 448 crore. Yes Bank shares rose more than 1% to close the day’s trading at Rs 366 on the NSE. However, the bank’s loan book expanded at much slower pace 10.5% to Rs 38,000 crore.

 “In the last five and half years, our book has grown at 35% CAGR,” said Rana Kapoor, MD and CEO, Yes Bank.

“If your include substitute credit in our loan growth, it has grown by 20% to Rs 46,200 crore. Moreover, we have earned interest from government bonds which are held in the form of statutory liquidity ratio or SLR. Both have supported our interest income in addition to spread earned from direct loans.”

Under substitute credit, the bank underwrites bond issues from reputed corporates. It is a form of indirect loan only but does not attract provisioning norms. Normally, banks encourage this form of lending business to avoid loan provisioning and operation expenditure. This in turn, adds to profit margin.

The new generation lender holds around 26% SLR as against 24% mandated by the Reserve Bank of India. During the year, it has sold loans around Rs 3,500 crore to earn fee income. Its other income shot up 37% to Rs 857 crore in FY12.

Currently, large corporate loans forms the major part of the bank’s loans to the tune of 60% while mid size companies has a share of 22% and the rest is retail loans. The restructured portfolio stood at just 0.53% (of the total loan book) at Rs 183 crore. During the Jan-March quarter, Yes Bank has referred three cases (total around Rs 50 crore) to the corporate debt restructuring cell.

Yes Bank is planning to raise USD 400-500 million in June either through global depository receipts or qualified institutional placements to support its growth plans.

Net profit grew by 34% to Rs 977 crore for the year ended March 31, 2012 while NII increased by 30% to Rs 1,616 crore during the 12 month period.

Yes Bank, which offers highest interest rate on savings deposits in the range of 6-7% has recorded a whopping growth in its savings account deposits though at a lower base. Savings account deposits trebled to Rs 2,500 crore. Consequently, the share of current account and savings account (CASA) to total deposits improves by 470 basis points to 15%. It aims to attain a CASA ratio of 30% by 2014-15.

During the fiscal, the gross non-performing asset ratio almost remained unchanged at 0.22% while the net NPA ratio inched up to 0.05% compared with 0.03% a year back.

Source: www.moneycontrol.com

Thanks,

Gaurav Agarwal

Head Dealer

DENIP Consultants Pvt Ltd