YES Bank announced impressive financial results for the December quarter on Saturday. The private sector lender based in Mumbai reported a significant 55 percent jump in net profit. The profit reached ₹952 crore, a substantial increase from ₹612 crore in the same period last year.
Key Factors Behind Profit Growth
A sharp decline in provisions played a crucial role in boosting the bank's bottom line. Overall provisions improved dramatically to ₹21.89 crore. This figure stood at ₹259 crore in the year-ago quarter. The reduction directly contributed to the profit expansion.
Core Income Performance
The bank's core net interest income grew by 10.9 percent to ₹2,466 crore. This growth came on the back of a 0.10 percent expansion in the net interest margin. Loan growth for the quarter registered at 5.2 percent.
YES Bank's Managing Director and Chief Executive, Prashant Kumar, addressed the loan growth figures. He stated the bank is adopting a cautious approach towards new loans. This caution explains why the loan growth remains lower than the double-digit performance seen across the banking system.
Challenges in Loan Segments
Kumar highlighted specific challenges in the market. He pointed out a fierce pricing battle on the corporate loans front. Furthermore, he noted that home and auto loans are currently not profitable for the bank. The high cost of funding makes these segments less attractive.
Despite these challenges, the bank has set a target. It is aiming for a loan growth of 8 percent for the financial year 2025-26.
Other Income and Asset Quality
Non-interest income also showed positive movement. It grew by 8 percent to ₹1,633 crore for the reporting quarter. From an asset quality perspective, the bank witnessed notable improvements.
Gross slippages reduced to ₹1,050 crore from ₹1,248 crore in the previous quarter. The gross non-performing assets (NPA) ratio improved by 0.10 percent. It now stands at a healthier 1.5 percent.
Segment-Wise Performance and Future Plans
Kumar provided insights into specific loan segments. He told reporters that slippages and delinquencies in the unsecured loan segment are coming down. This segment includes exposures on credit cards and personal loans.
A bulk of the loan growth during the quarter came from the commercial banking segment. The bank's overall capital adequacy remained strong at 14.5 percent as of December. Kumar confirmed the bank has no immediate plans to raise more funds.
Management and Provisions
The bank had to make a specific provision of ₹155 crore. This provision was due to the implementation of new labour codes towards gratuity. On the management front, Kumar declined to comment on certain topics.
He did not comment on Japanese lender SMBC's decision. SMBC, the biggest shareholder in YES Bank, plans to start a wholly owned subsidiary in India. Kumar also did not confirm if he is keen to continue at the lender after his term ends in April.
However, he did mention that the bank has initiated a succession plan. He chose not to go into specific details about this plan at this time.
