Private sector lender YES Bank reported a 38.1% on-year rise in net profit to Rs 290.10 crore for the first quarter (Q1, April-June) of this fiscal. The growth was supported by net interest income of Rs 472.20 crore which grew 39.6% on-year.
The bank’s non-interest income was up 53.4% at Rs 288.10 crore. Current accounts savings accounts (CASA) ratio improved from 16.3% to 20.2% and total deposits grew 30%. The bank witnessed a 2.6% contraction in deposits compared to the previous quarter. It expects to end the year with a 25% growth in deposits.
Q1 credit growth was lower at 24.3% and is expected to be at similar levels by the end of this fiscal.
However, the net interest margins (NIMs) were flat at 3% compared to the previous quarter. Rana Kapoor (pictured) co-founder and CEO of YES Bank, said that the bank aims to maintain NIMs around 3% for the rest of the fiscal year.
“We had expected NIMs to improve for the rest of the year but now margin preservation is important,” said Kapoor.
Recent regulatory measures to tighten short-term liquidity will not have significant impact on the bank’s margins, he said. For, YES Bank’s reliance on certificates of deposits (CDs) and call money has reduced. He said that CDs constituted 11-12% of the total deposits maturing in 6-7 months.
CDs are short-term debt instruments issued by banks to raise funds from the money market.
“We expect margin pressure to remain in the near term and improve as and when the bulk deposits get re-priced and the benefits start coming into the cost of funds,” said banking analyst Abhishek Kothari at Violet Arch Securities.
The bank’s gross non-performing assets (NPAs) ratio and net NPA ratio were marginally up at 0.22% and 0.03% respectively.
The bank’s capital adequacy ratio stood at 15.4% under Basel-III norms. Kapoor said that the bank would look at raising $500 million as markets stabilise in Q3.
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