Yes Bank Q1 Results: Net Profit Rises 60%, Asset Quality Stable
Yes Bank Ltd.’s Q1 results have surprised many, as the bank reported a net profit of Rs 801 crore, marking a 60% year-on-year (YoY) growth and a 9% sequential growth.
Net interest income, or core income, of the private sector lender rose 6% on year to Rs 2,372 crore, while operating profit surged 53% on year to Rs 1,358 crore. Net interest margin of the bank remained stable at 2.5% on quarter.
Provisions and contingencies against bad loans rose to Rs 284 crore as against Rs 212 crore a year ago. However, this increase was largely expected, given the current macroeconomic conditions and the bank’s efforts to strengthen its risk management framework.
Asset quality of the bank remained stable, with gross non-performing assets (GNPA) ratio flat on quarter at 1.6% and net non-performing assets (NNPA) ratio also flat at 0.3% at the end of June.
Overall, gross slippages of the private sector bank rose to Rs 1,458 crore as against Rs 1,223 crore in the prior quarter. This increase was largely due to the bank’s efforts to clean up its balance sheet and strengthen its risk management framework.
Net advances of the bank grew 5% on year to Rs 2.41 lakh crore, driven by growth in retail advances. Retail advances of the bank were Rs 1.18 lakh crore at the end of the June quarter, up from Rs 1.01 lakh crore a quarter ago.
Total deposits of the bank were 4.1% higher on the year to Rs 2.75 lakh crore, driven by growth in current and savings accounts.
The current account and savings account (CASA) ratio or CASA dropped to 32.8% in the June quarter against 34.3% a quarter ago, but was higher than the ratio a year ago, which stood at 30.8%. Credit deposit ratio of the bank was 87.4%, higher than 86.5% a quarter ago and 86.6% a year ago.
What Does it Mean for Investors?
Yes Bank’s Q1 results are a welcome surprise, as the bank’s efforts to strengthen its risk management framework and clean up its balance sheet are paying off. The bank’s stable asset quality and strong operating performance are a testament to its ability to navigate challenging macroeconomic conditions.
Investors can take comfort in the bank’s ability to deliver strong results, despite the challenges posed by the COVID-19 pandemic and the subsequent economic downturn. The bank’s focus on retail lending and its efforts to strengthen its risk management framework are also positive signs for investors.
Conclusion
Yes Bank’s Q1 results are a strong indication that the bank is on the right track, despite the challenges posed by the current macroeconomic conditions. The bank’s stable asset quality, strong operating performance, and focus on retail lending make it an attractive option for investors seeking exposure to the Indian banking sector.
