Yes Bank posts 91% drop in quarterly profit, asset quality hit

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Mumbai/Bengaluru: Indian lender Yes Bank Ltd posted a 91% drop in quarterly profit on Wednesday, due to a nearly three-fold rise in provisions for loan losses, while asset quality deteriorated sharply.

Net profit for the three months ended June 30 came in at 1.14 billion rupees ($16.57 million), compared with 12.60 billion rupees last year. Analysts, on average, were expecting it to earn 2.79 billion rupees during the period, according to Refinitiv data.

Provisions for loan losses surged to 17.84 billion rupees in the quarter.

Net interest margin, a key indicator of a bank`s profitability, also slipped to 2.8% in quarter ended June compared to 3.3% in the same quarter, a year ago. The private-sector lender shocked markets with its first-ever loss in the preceding quarter, as it set aside higher provisions and logged fresh bad loans to the tune of 34.81 billion rupees, some of which were on account of its exposure to a struggling airline and infrastructure conglomerate IL&FS.

Gross bad loans as a percentage of total loans, a measure of asset quality, spiked to 5.01% as of June-end, compared to 3.22% last quarter.

“Even though the bad loans have increased, the bank had already guided for it, which means that there is likely no incremental pain,” said Asutosh Mishra, head of research of institutional equities at Ashika Stock Broking.

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