Release Date: July 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Yes Bank Ltd (BOM:532648, Financial) delivered its highest quarterly profit since reconstruction, amounting to INR502 crores, a 46.7% YoY increase.
- The bank's net NPA ratio improved significantly to 0.5%, down from 2.4% in the same quarter last year.
- Yes Bank Ltd (BOM:532648) received a rating outlook upgrade from Moody's and ICRA, reflecting positive external stakeholder views.
- Net interest income grew by 12.2% YoY to INR2,244 crores, with a steady net interest margin of 2.4%.
- The bank's core fee income grew by 20.5% YoY, driven by strong customer acquisition and digital banking initiatives.
Negative Points
- Retail slippages remain high, with around 40-45% of slippages coming from unsecured loans.
- The cost-to-income ratio, normalized for various factors, remains high at 71.8%, indicating room for efficiency improvements.
- The bank's CASA ratio remained relatively flat at 30.8%, showing limited growth in low-cost deposits.
- Retail advances saw a sequential decline of 3.1%, indicating challenges in the retail lending segment.
- The bank expects some moderation in its UPI market share, which could impact fee income and float benefits.
Q & A Highlights
Q: I have seen in the presentation that the gross gain to P&L is around INR600 crores-odd, whereas the recovery is in excess of INR700 crores from SRs. Can I suspect the difference in the numbers there?
A: Whenever we have cash flow coming in from security receipts, some of it goes for redemption of the face value of the security receipts. If there is a carrying value on the balance sheet, it reduces the carrying value of such security receipts. The excess over the carrying value becomes the write-back to the P&L.
Q: Just want an update on the unsecured loan book. We've had some issues in the last couple of quarters, is there any kind of an update of what you are seeing in your portfolio?
A: The unsecured book has some issues in certain segments. We have undergone policy changes, implemented new scorecards, and cut down on certain markets and profiles. We have also strengthened our collection machinery and are being extra cautious around this segment.
Q: In the fee income, there is a negative fee on the trading side. What explains this negative treasury income?
A: The core fees have done well, growing over 20% YoY. The negative treasury income is due to revaluation effects and a muted gain on the sale of investments this quarter compared to last year.
Q: On the loan growth side, even in this quarter, it looks like retail growth is subdued. How do you look at retail and corporate growth?
A: SME and mid-corporate advances continue to grow at mid-20s percentage. Retail growth is subdued due to recalibration for profitable growth. Corporate advances have picked up due to new business generation and slower rundown of the old book.
Q: In the opening remarks, it was mentioned that you may see a decline in the UPI share. Why would it come down?
A: The UPI share may decline because the business from one company with issues has been migrated to four banks. Initially, most of it came to us, but going forward, it will be equally distributed among the four banks.
Q: On PSL, given the expenses incurred, when should we expect the gap between PSL and XOP to neutralize?
A: We are focusing on increasing the share of organic compliance to PSL. The RIDF book should start reducing in FY25 and come below 5% by FY27, aiding our margins.
Q: On retail slippages, can you give some color on the breakup between secured and unsecured?
A: Out of the total slippages, around 40-45% is from the unsecured segment. We have strengthened our collection machinery and taken measures to address the issue.
Q: There were news articles suggesting the largest shareholder may be replaced by another bank. Can you comment on that?
A: We have already clarified to the stock exchanges that these news items are not correct.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
