Yes Bank Q3 profit jumps 30 percent, beats estimates

Private sector lender Yes Bank has reported a 30.6 percent year-on-year rise in net profit for the quarter ended December, beating market expectations. But, as with several rival banks, asset quality remains a concern and weakened in the three-month period, compared to a year earlier.

Yes Bank reported a net profit of Rs 882.6 crore for the third quarter of FY17, against Rs 675.7 crore in the year-ago period. Net interest income—the difference between interest earned and interest expended— rose by a third to Rs 1,507.5 crore, from a year ago.

Asset quality for the bank, weakened in absolute terms in the quarter. Gross non-performing assets (NPAs), at Rs 1,005.9 crore, rose nearly ten percent sequentially from the three months ended September 2016. Gross NPA ratio stood at 0.85 percent in the December quarter.

At Rs 342.4 crore, net NPAs were six percent higher than the September quarter. Net NPA ratio increased to 0.29 percent in the quarter, from 0.13 percent a year ago.

In a media statement issued after the earnings were announced, Yes Bank’s managing director and CEO Rana Kapoor said: “Yes Bank delivered another quarter of satisfactory performance across key financial parameters of growth and profitability driven by expansion in net interest margins (NIMs) to 3.5 percent.”

All banks are in the race to clean up their balance sheets and reduce rising levels of NPAs and stressed assets. The Reserve Bank of India (RBI), which has carried out its asset quality review (AQR) has told these banks to clean their balance sheets off these bad assets by March 2017.

The bank’s loan book continued to expand. Advances grew 38 percent to Rs 117,087 crore, compared with Rs 84,396 crore a year ago and deposits rose 30.5 percent to Rs 132,375 crore, data showed.

Analysts called the earnings positive. Parag Jariwala of Religare Capital Markets called the earnings data in-line and said the asset quality was stable. Yes Bank’s stock ended flat at Rs 1,347.15 on BSE after the earnings.