Continue to explore opportunity to acquire microfinance co, says YES Bank MD
This story was originally published at 17:22 IST on 26 October 2024
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--Continue to explore opportunity to acquire microfinance co
--Reported highest quarterly profit since 2020 restructuring
--See 17-18% deposit growth, 13-14% loan growth in FY25
--Healthy momentum continues in bad loan recoveries, resolutions
--Remain very watchful on unsecured loan segment
--Not rushing to accelerate growth in unsecured loans segment
--Saw significant drop in restructured loan accounts Jul-Sept
MUMBAI – Despite the current stress in the microfinance segment, YES Bank will continue to explore opportunities to acquire a microfinance institution, said Managing Director and Chief Executive Officer Prashant Kumar.
"We still believe this is a good business, which will continue to exist. It is only about timing of acquisition, I think this is the right time," Kumar said, while speaking to the media post the bank's earnings.
YES Bank on Saturday reported its highest quarterly profit since its reconstruction in March 2020. The net profit for the September quarter surged 145.6% on year to INR 5.53 billion, far exceeding the market expectation of INR 4.91 billion.
YES Bank is struggling to meet priority sector lending, and acquisition of a microfinance institution will help the bank meet the target. Banks are required to park money in rural infrastructure development funds to plug the shortfall in meeting priority sector lending targets. However, interest rates on infrastructure development funds investment are low, which creates a drag on net interest margins.
Kumar said the bank's deposits will grow 17-18%, while loan growth is seen at 13-14% for the current financial year. The bank's credit-deposit ratio fell to 84.8% as on Sept. 30 from 86.6% a quarter ago. Net advances were up 12.4% on year, and total deposits were at INR 2.77 trillion as on Sept. 30, up 18.3% on year.
However, the bank remains "very watchful" on the unsecured loan segment, and is not rushing to accelerate growth in this area, the bank official said.
On asset quality, Kumar said the bank saw a significant drop in restructured loan accounts in Jul-Sept and healthy momentum continues in bad loan recoveries and resolutions. Asset quality improved during the quarter, with the gross non-performing assets ratio at 1.6%, compared to 1.7% a quarter ago and 2.0% a year ago.
On Friday, shares of the bank closed 3.2% lower at INR 19.38 on the National Stock Exchange. End
Edited by Avishek Dutta
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