Yes Bank Q3: Net Profit Falls 79 Per Cent To Rs 52 Crore; Bank To Appeal AT-1 Ruling Of 2020

The private sector lender has also announced that it will appeal against the Bombay High Court's order in the Rs 8,400-crore AT-1 bonds case of 2020, saying it has strong legal grounds to do the same

According to the filing, Bank’s the net profit decreased by 66 per cent quarter on quarter to Rs 153 crore for the three-month period ending on September 30, 2022.

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Yes Bank's net profit dipped by 80 per cent to 52 crores in the third quarter of the fiscal year 2022-23, according to the exchange filing by the bank on January 21. In Q2 of FY22 was net profits were Rs 266 crore. Bank said profits were affected “due to ageing related provisions.”

The private sector lender has also announced that it will appeal against the Bombay High Court's order in the Rs 8,400-crore AT-1 bonds case of 2020, saying it has strong legal grounds to do the same.

According to the filing, Bank’s the net profit decreased by 66 per cent quarter on quarter to Rs 153 crore for the three-month period ending on September 30, 2022. Although the bank’s net interest income, increased to Rs 1,970.6 crore in Q3 of FY23 from Rs 1,764 crore in the year-ago period, an 11.7 per cent jump. The Net interest income (NII) stood at Rs 1,991 crore, flat compared with the previous quarter.

Bank’s non-interest income jumped 55.8 per cent to Rs 1,143 crore. It was largely helped by a Rs 100 crore sale of corporate bonds received as part of a dud loan resolution.

The overall provisions shot up to Rs 845 crore from the Rs 375 crore in the year-ago period. 

Bank's chief executive and managing director Prashant Kumar said that if one were to add the net non-performing assets and security receipts, there is still an outstanding of Rs 5,746 crore which the bank is carrying that may require more ageing-related provisions in the future.

The transfer of a bulk of its bad assets to J C Flowers asset reconstruction company resulted in the gross non-performing assets ratio dropping to 2 per cent from the over 13 per cent level in the quarter-ago period.

Kumar also said that corporate slippages will fall to Rs 300-500 crore per quarter going forward.

Gross slippages for the quarter totaled Rs. 1,610 crores, of which Rs. 962 crores came from corporate sources and Rs. 549 crores from retail sources.

Kumar said, the bank has recovered over Rs 4,300 crore of loans till now, and with an additional Rs 1,000 crore expected in the last quarter, is all set to exceed the FY23 guidance of Rs 5,000 crore in recoveries. 

The bank will continue to aim for a 15 per cent loan growth rate in FY23, according to Bank CEO, and will concentrate on expanding profitably now that the problematic assets have been transferred and it has received cash from Carlyle and Advent.

Kumar said the bank would not be able to reach its short-term goal of increasing current and savings account deposits to 35 per cent of the base and is likely to keep the same ratio at 30 per cent.

In response to the Bombay High Court's ruling that AT-1 bonds should have been extinguished at the time of the bank bailout in March 2020, Kumar said that the bank had obtained legal advice indicating that there were solid grounds to file a challenge.

According to him, the Bombay High Court has only raised concerns about the perpetual bond writing process and not about the applicable regulations.

The Bombay High Court provided the bank with immediate relief and gave it six weeks to file an appeal, during which time the order will be put on hold, according to Kumar. He said that the bank had not made any plans for the setback. He also made it clear that the remaining part of the capital infusion from Advent and Carlyle to come via warrants will happen despite the HC order.