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Yes Bank Q2 profit falls 4% as provisions more than double; asset quality weakens

Posted on 25 October 2018 | 12:16 pm by

Net interest income during the quarter increased 28.2 percent to Rs 2,417.55 crore with healthy loan growth of 61.2 percent driven by refinancing (in corporate segment) and retail book.


Private sector lender Yes Bank's second quarter profit fell 3.8 percent year-on-year to Rs 964.7 crore, dented by sharp rise in provisions and weak asset quality performance.
Profit included the impact of Rs 252.2 crore of one time MTM provisioning, predominantly on corporate bonds. Adjusted net profit grew by 36.2 percent YoY, the bank said.
Net interest income during the quarter increased 28.2 percent to Rs 2,417.55 crore with healthy loan growth of 61.2 percent driven by refinancing (in corporate segment) and retail book.
Advances increased to Rs 2.39 lakh crore for the quarter ended September 2018, from Rs 1.48 lakh crore at the end of September 2017.
Yes Bank said retail banking advances grew 103 percent YoY to 14.3 percent of advances in comparison to 11.4 percent in Q2FY18. Deposits growth was also strong at 41 percent YoY.
The private sector lender's asset quality deteriorated during the quarter. Gross non-performing assets (as a percentage gross advances) increased to 1.60 percent against 1.31 percent in June quarter. Net NPA was also higher at 0.84 percent against 0.59 percent in previous quarter.
While explaining the reason for increase in NPA, the bank said increase in GNPA from earlier disclosed provisional ratio for Q2FY19 (on October 1, 2018) due to classification of one account with exposure of Rs 631.2 crore as NPA based on post period end review process.
Bank expects prepayments and consequent upgrade of this exposure in Q3FY19.
In absolute terms, gross NPAs were higher by 37 percent sequentially at Rs 3,866 crore and net NPAs by 60 percent at Rs 2,019.7 crore in quarter gone by.
Provisions and contingencies in Q2 at Rs 939.98 crore shot up sharply by 50.2 percent sequentially and 110.3 percent year-on-year.
"The above provision included Rs 409.2 crore towards NPA provisioning, Rs 9.7 crore on account of NPI/ARC provision, Rs 344.9 crore towards investment provisioning, Rs 92.7 crore of amortisation of MTM provisions on bonds allowed under the RBI dispensation, and Rs 117.6 crore of standard assets provisions," Yes Bank said.
Other income (non-interest income) grew by 18 percent on year to Rs 1,473.5 crore and operating profit increased by 24.1 percent to Rs 2,366.4 crore for the quarter ended September 2018.
The stock was down 2.77 percent to close at Rs 198.35 ahead of earnings announced after market hours.
The stock plunged 46 percent during July-September period and 32 percent year-to-date, especially after RBI asked Rana Kapoor to step down as MD and CEO from January 2019.
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