scorecardresearchQ3 earnings impact: Yes Bank shares shed over 12% in intra-day deals as profit drops 80%

Q3 earnings impact: Yes Bank shares shed over 12% in intra-day deals as profit drops 80%

Updated: 23 Jan 2023, 09:50 AM IST
TL;DR.
Yes Bank's net profit in Q3 FY23 was adversely impacted due to ageing related provisions, the lender informed the stock exchanges.
The stock fell as much as 12.3 percent in morning deals to its day's low of  <span class='webrupee'>₹</span>17.35. In the last 1 year, the stock has jumped 43 percent, in line with the strong performance of banking stocks.

The stock fell as much as 12.3 percent in morning deals to its day's low of 17.35. In the last 1 year, the stock has jumped 43 percent, in line with the strong performance of banking stocks.

Shares of private sector lender Yes Bank tanked over 12 percent in early morning deals after the bank reported an 80 percent year-on-year (YoY) decline in its net profit to 52 crore in the third quarter of FY23 (Q3FY23) versus 266 crore in the year-ago period.

Sequentially, this fall was 66 percent from 153 crore in the second quarter of FY23. The net profit in Q3 FY23 was adversely impacted "due to ageing related provisions", the lender informed the stock exchanges.

The bank's net interest income, however, increased 11.7 percent to 1,970.6 crore in Q3FY23 from 1,764 crore in the year-ago period. Its total net income, meanwhile, stood at 3,114 in Q3FY23, up 24 percent YoY and 7 percent up QoQ.

The company further informed that it has witnessed a 'sustained improvement' in its non-performing asset ratios. The gross non-performing performing asset (GNPA) ratio stood at 2 percent in the December quarter, as against 14.7 percent in the year-ago period whereas the NNPA ratio came down to 1 percent, as compared to 5.3 percent in Q2 FY23.

"With the successful transfer of stressed Assets to the JC Flowers ARC, the GNPA and NNPA Ratios have now declined to 2 percent and 1 percent respectively which is the lowest since Q3FY19," said Yes Bank MD and CEO Prashant Kumar.

He added: At the same time, the operational momentum of the Bank continues with further step-up in Disbursements across segments and the highest Operating Profit in the last eight quarters.

The bank recorded new sanctions and disbursements of 27,311 crore in Q3 FY23. Meanwhile, its balance sheet during the quarter under review grew 12.9 percent YoY to 3,43,798 crore.

The total deposits stood at 2,13,608 crore, up 15.9 percent YoY and net advances during the quarter stood at 1,94,573 crore, up 10.4 percent YoY.

The stock fell as much as 12.3 percent in morning deals to its day's low of 17.35. In the last 1 year, the stock has jumped 43 percent, in line with the strong performance of banking stocks.

In January till now, the stock has shed 11 percent, snapping 2 months of gains. It rose 20 percent in December 2022 and 10 percent in November 2022.

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In an earnings review note, brokerage house Nirmal Bang stated that two major events marked Yes Bank’s Q3FY23: (i) a fresh capital infusion of 8,900 crore from Carlyle and Advent groups and (ii) the completion of the sale of stressed assets to J.C. Flower ARC.

"The bank concluded capital raise and received 5,090 crore by way of equity investment while the balance of 950 crore came in terms of warrants. The sale of stressed assets to ARC improved asset quality, with GNPA/NNPA down at 2.02 percent/1.03 percent vs 12.89 percent/3.6 percent in Q2FY23. The net profit declined by 81 percent YoY due to elevated provisions, which increased by 125 percent YoY," noted Nirmal Bang.

It further pointed out that the advances growth was impacted by the sell-down of assets and registered a growth of 1.2 percent QoQ (10.4 percent YoY). Deposits maintained good momentum, increasing by 6.8 percent QoQ (15.9 percent YoY), it added.

On the operational front, NIM declined by 10bps QoQ, but adjusted for recovery on NPA in Q2FY23, NIM was flat. The non-interest income grew by 55.8 percent YoY (24.3 percent QoQ), partially aided by the receipt of funds from the sale of stressed assets to ARC. Operating expenses remained elevated on the back of branch expansion and technology investments. The management indicated that the bank is in the process to appeal in Supreme Court against the recent High court order that quashed the write-off of additional tier 1 bonds (AT 1) issued by the bank, stated the brokerage.

Post the earnings, the brokerage has put the stock “Under Review” seeking further understanding on provisioning implications of security receipts which may impact profitability going forward.

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First Published: 23 Jan 2023, 09:50 AM IST