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Informist, Thursday, Jul 18, 2024

 

By Kabir Sharma

 

MUMBAI – YES Bank's net profit for Apr-Jun is seen rising 11.3% on year to 3.81 bln rupees as a growth in advances will be offset by the rise in cost of funds, according to estimates by four brokerage firms. The bank had reported a net profit of 3.43 bln rupees a year ago. It will detail its earnings on Saturday. Shares of the bank today closed 1.7% lower at 25.75 rupees on the National Stock Exchange. 

 

The bank's bottomline is expected to see a sharp decline of 16% from the previous quarter. For Jan-Mar, the bank reported a net profit of 4.52 bln rupees.

 

"We expect weak NII (net interest income) growth as healthy loan growth will be offset by rising cost of funds," Kotak Institutional equities said in a report. The bank's net interest income for the Jan-Mar quarter increased 2.3% on year to 21.53 bln rupees and the net interest margin was at 2.4% from 2.8% in the same quarter a year ago. 

 

According to provisional data released by the bank, advances increased 14.8% on year to 2.3 trln rupees as of Jun 30. The total deposits of the bank rose 20.8% on an annual basis to 2.65 trln, as of Jun 30. In terms of asset quality, the gross non-performing asset ratio fell to 1.70% as of Mar 31 from 2.0% a quarter ago. Net non-performing asset ratio fell to 0.6% from 0.9% a quarter ago. The bank had sold bad loans worth 6.80 bln rupees to asset reconstruction company during the Jan-Mar quarter.

 

Out of the total deposits, the current account and savings account saw an on-quarter fall of 1.1%. The CASA was 814.05 bln rupees, as against 645.7 bln rupees a year ago and 823.2 bln rupees a quarter ago. The liquidity coverage ratio of the bank was 137.8% as of Jun 30, against 127.0% a year ago. The bank's deposits are expected to continue to outperform the advances. 

 

Brokerages expect the net interest margin to be around 2.3% for the quarter. This is a decline of 10 basis points on the back of a likely fall in unsecured loan book, which the bank has slowed given the increase in delinquency rates. 

 

"Slippages could remain elevated, but bank has recovered dues from ARC (asset reconstruction companies), which can help in maintaining its GNPA (gross non-performing asset) ratios," Emkay Global said in a note. Gross slippages for the Jan-Mar quarter were 13.6 bln rupees compared with 12.3 bln rupees a quarter ago.

 

In terms of asset quality, the gross non-performing asset ratio fell to 1.70% as of Mar 31 from 2.0% a quarter ago. Net non-performing asset ratio fell to 0.6% from 0.9% a quarter ago. The bank sold bad loans worth 6.80 bln rupees to asset reconstruction company during the Jan-Mar quarter.

 

Investors will look for commentary around growth and a return to normalised levels of business operations in the management's comments. Following are the Apr-Jun earnings estimates of YES Bank based on reports compiled by Informist from four brokerage houses:

 

Brokerage firm	NII (in mln rupees)	Net Profit(in mln rupees)
Anand Rathi Share and Stock Brokers	21,856	3,862
Emkay Global Financial Services	22,221	4,065
Kotak Institutional Equities	21,413	4,519
Nomura Equity Research	22,100	2,800
Average	21,897.50	3,811.50

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Akul Nishant Akhoury

 

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