Release Date: October 26, 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) reported the highest quarterly profit since reconstruction, with a net profit of INR 553 crore, up 146% YoY and 10% sequentially.
- The bank's deposit growth momentum continued with an 18% YoY and 5% quarter-on-quarter growth, with CASA ratio improving by 260 basis points YoY.
- Asset quality showed improvement with the gross NPA ratio declining to 1.6% from 1.7% in the previous quarter, and the provision coverage ratio increased to 70%.
- Net interest income grew by 14% YoY, and non-interest income increased by 16% YoY and 17% quarter-on-quarter.
- The bank's strategic focus on SME and mid-corporate advances resulted in a superior growth rate of 26% each.
Negative Points
- Despite strong financial performance, Yes Bank Ltd (BOM:532648) has not seen significant growth in its share price, raising concerns among investors.
- The unsecured segment, particularly credit cards and personal loans, is contributing to heightened stress, with about 35% to 40% of slippages coming from this segment.
- The bank's net interest margin remains lower compared to peers at 2.4%, with challenges anticipated due to potential interest rate reductions.
- The CET1 ratio slightly decreased from 13.3% to 13.2% due to increased risk weights on certain portfolios.
- The bank's cost-to-income ratio remains high at 73%, indicating room for efficiency improvements.
Q & A Highlights
Q: Despite good performance, there is no significant growth in YES Bank's share price. What actions are being taken by management? Also, will dividends be announced after three consecutive years of profit?
A: We focus on sustained performance in business and profitability. The Board evaluates dividend distribution based on our dividend policy. We aim to optimize returns for stakeholders. Regarding share price, we do not comment on stock movements.
Q: With interest rates potentially decreasing, how will YES Bank sustain or improve its margin profile, given its lower margins compared to peers?
A: Our margins are currently at 2.4%, impacted by RIDF assets. As these reduce, margins should improve. We are well-matched in assets and liabilities, and any interest rate changes should neutralize over time. Competitive landscape will also influence margins.
Q: How is the unsecured retail book, including credit cards and personal loans, holding up?
A: While unsecured loans contribute to delinquencies, we've slowed down on these products to manage asset quality. We are seeing some improvement in disbursements and will continue to monitor this segment closely.
Q: Can you explain the increase in provisions from INR210 crores to INR297 crores?
A: The increase is due to our efforts to improve the Provision Coverage Ratio (PCR), which has risen from 67.6% to 70%, translating to about INR100 crores in additional provisions.
Q: What is the outlook for CASA growth, and how does UPI float contribute to this?
A: Our CASA growth is driven by a segmented strategy and improved service offerings. We have a strong presence in the UPI space, which contributes to current account balances. Our cost of deposits remains competitive.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
