Yes Bank has announced a robust 45 per cent surge in its March quarter net profit to Rs 1,068 crore, with its new leadership signalling the successful conclusion of a six-year recovery period and an ambitious pivot towards aligning loan growth with the broader banking sector.
Photograph: Danish Siddiqui/Reuters
Key Points
- Yes Bank’s net profit for the March quarter surged by 45 per cent to Rs 1,068 crore, marking a significant financial improvement.
- The bank’s management, led by new MD and CEO Vinay M. Tonse, has declared an end to its six-year recovery phase, shifting focus to growth.
- Yes Bank aims to align its loan growth with the broader banking sector, having previously prioritised profitability and asset quality over rapid expansion.
- The lender possesses adequate capital to support its planned expansion for the next four to five quarters.
- Gross non-performing assets ratio declined to 1.3 per cent, reflecting improved asset quality.
Private sector lender Yes Bank on Saturday reported a 45 per cent jump in its March quarter net profit to Rs 1,068 crore, and signalled an end to its over six-year-long recovery phase.
After focusing on profitability and asset quality, which led it to slow the pace of asset growth, the city-headquartered lender now expects its loan growth to align with the broader banking sector, its management said.
Strategic Shift Towards Growth
The bank emerged stronger after years of balance-sheet repair and is now positioned to scale up lending in line with industry trends, Vinay M. Tonse, its new managing director and chief executive officer, said.
“If you observe, Yes Bank as a franchise has not grown in line with the market for the last few quarters. And we’ve been very conscious about not growing as fast,” Tonse said.
Going ahead, the bank made clear that its growth stance will change.
“Our aspiration clearly is that we should clearly be at what market is doing from a growth perspective,” Tonse said while reiterating that underwriting standards and risk discipline will remain central to its expansion plans.
Building on a Strong Foundation
The lender emphasised that the turnaround over the past several years has created a foundation for sustainable growth.
The management noted that the bank has come out very strongly out of that place of recovery or transition and now sees significant opportunities to expand its franchise.
It can be noted that in March 2020, days before the onset of the Covid crisis, the lender had to be rescued as part of a plan jointly launched by the government and the Reserve Bank due to malpractices which led to amassing of bad assets.
In the initial days after rescue, it recognised a huge volume of bad assets and later transferred over Rs 40,000 crore of such dud assets to an asset reconstruction company.
Capital Adequacy and Financial Performance
Tonse also highlighted that the lender has adequate capital to support expansion in the near term, stating that the bank has fairly enough capital for growth to easily see through about four or five quarters.
In the reporting quarter, its net interest income grew by nearly 16 per cent to Rs 2,638 crore, on the back of 0.20 per cent expansion in net interest margin at 2.7 per cent and an 11 per cent jump in advances. The non-interest income came at Rs 1,730 crore.
The bank witnessed a deposit growth of 12 per cent, and the credit deposit ratio decreased to 85.7 per cent.
Its gross non-performing assets ratio declined to 0.20 per cent to 1.3 per cent during the quarter.
