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Yes Bank beat the market estimates with its performance in the second quarter of FY22. The bank posted a 74% YoY jump in its net profit to Rs. 225 crores in Q2 FY22 compared to Rs. 129 crores in the year-ago period. The sharp spike in the PAT came on the back of a sharp decline in the provisions of the bank and improved asset quality. The bad debt provisions fell by 65% YoY and amounted to Rs. 377 crores in the quarter under review.

Nonetheless, Yes Bank’s net interest income was reduced by 23.4% YoY and amounted to Rs. 1512 crores at the end of the second quarter of FY22. The net interest margin fell alongside, to 2.2% in the second quarter, compared with 3.1% in the last quarter. However, the public sector bank’s non-interest income jumped by 30% YoY and amounted to Rs.778 crores.

Operating profits suffered a setback. The operating profit reduced 45.8% YoY and stood at Rs.678 crores in Q2. This is being attributed to the increased business activity in the quarter. In line, the operational expenses for the bank reflect a 5% increase in QoQ and stand at Rs.1612 crores at the end of September 2021 (Q2 FY22). 

The silver lining is the bank’s Gross Non-Performing Assets (GNPA) ratio that reduced 15% sequentially. The Non-Performing Asset (NPA) ratio also reduced by 0.3% from the last quarter and stood at 5.5%.

The bank has managed to bring overdue loans, on which the repayments were pending for more than 30 days but less than 90 days, under control. These loans witnessed a reduction by Rs. 6000 crores on a QoQ basis. The bank’s gross restructured loans amounted to Rs. 6184 after the end of the second quarter. The composition of retail loans grew by 100 basis points on a QoQ basis and stood at 55% after the second quarter. 

The CASA ratio for Yes Bank improved to 29.4% in the second quarter against 27.4% in the June quarter. Deposits grew by 30% YoY showing the increased confidence of customers.

Hits

  • 74% YoY jump in the net profit, from Rs. 129 crores to Rs. 225 crores
  • 65% YoY reduction in bad debt provisions
  • 30% YoY jump in the non-interest income which stood at Rs.778 crores
  • 15% sequential reduction in the GNPA ratio. The NPA ratio also reduced from 5.8% last quarter to 5.5% this quarter 
  • Overdue loans reduced by Rs.6000 crores sequentially
  • Growth of 100 bps YoY in the bank’s composition of retail loans which now stand at 55%
  • CASA ratio rose to 29.4% this quarter compared to 27.4% last quarter
  • 3.5% YoY and 5.6% QoQ jump in advances
  • 30% YoY jump in deposits 

Misses

  • 23.4% YoY fall in the net interest income which stood at Rs.1512 crores
  • Reduction in the net interest margin, from 3.1% last quarter to 2.2% this quarter
  • 5% sequential jump in the operating expenses which amounted to Rs.1612 crores. This reduced the operating profit by 45.8% YoY 

Management Commentary

Yes Bank issued a statement saying that its fresh slippages were lower in the September quarter at Rs. 1783 crores as against Rs. 2233 crores last quarter. The bank also said that it made prudent provisions worth Rs. 336 crores on a single telecom exposure. 

Against the restrictions imposed by the RBI on MasterCard to take on new clients, Yes Bank said that there was no impact on its performance. It also said that its integration with Visa has been completed and the issuance from the Visa platform has started from 17th September 2021. The integration with NPCI/RuPay is ongoing and will be launched soon.

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