Yes Bank Q4 Results: Profit rises as Provisions drop

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Yes Bank Q4 FY22 earnings

Yes Bank Ltd. has reported its first full-year profit since 2018-19 in the March quarter for the year 2022.

Profit beats estimates: The Bank has reported its first full-year profit since 2018-19. It reported a net profit of Rs 367 crore in Q4Y22, up 38% over the previous quarter, beating street expectations. Analysts had earlier anticipated a loss of about Rs 254 crore. The bank had reported a loss of Rs 3,788 crore in the same quarter last year.

Net interest income rises: A bank’s primary business is to borrow money and lend the same at a rate higher than the rate at which they borrowed. The income generated from this differential is known as net interest income. Net interest income for Yes Bank grew to Rs 1,819 crore, up 3.1% as compared to the previous quarter and 84.4 per cent year-on-year (YoY). Net interest margin grew 10 bps on-quarter to 2.5%.

Asset quality improves: The bank’s Gross NPA ratio stood at 13.93% compared with 15.36% in the Jan-Mar quarter, down 72 basis points sequentially. Net NPA ratio reduced 76 bps on-quarter to 4.53%.

Provisions: Provisions and contingencies for the quarter ended March 2022 stood at Rs 271 crore, declining substantially by 94.7% compared to the year-ago period and 27.7% from the previous quarter.

Deposits: The Bank’s deposits aggregated to approximately Rs 1.97 lakh crore as of March 22, a growth of around 7% on-quarter and 21% YoY. Bank’s CASA (current and savings account) deposits now comprise 31.1% of total deposits of the bank, up 70 bps from the previous quarter. CASA capital is the cheapest source of capital for banks. Due to the strong pick-up in retail and SME disbursements, the bank’s net advances grew 3% quarter-on-quarter.

Management Commentary: "Yes Bank's capital base is enough to aid growth aspirations in FY23. In the current uncertain times, (it's) always important to have a buffer available. If there is an opportunity available to add this buffer, we will look at it," Prashant Kumar, Chief executive, and managing director.

Brokerage Update

ICICI Securities retained a "HOLD" rating on YES Bank with a target price of Rs 14. The brokerage believes that the revamped leadership (leveraging on the backing of leading shareholder banks, changed governance, and underwriting framework) is stabilising and turning around YES Bank from its downcycle.