Yes Bank misses estimates, posts 4% drop in Q2FY19 PAT; Here is why Rana Kapoor led bank posted decline

Rana Kapoor led Yes Bank revealed today that it has missed analysts estimates during the September 2018 quarter (Q2FY19). Yes Bank posted a decline in its net profit. The bank recorded a net profit of Rs 964.70 crore in Q2FY19, which was down by 3.79% from Rs 1,002.73 crore in the corresponding period of previous year. Interestingly, the quantum of loss in Yes Bank Q2FY19 net profit was down even more by 23.45% compared to net profit of Rs 1,260.36 in Q1FY19. With this Yes Bank missed analysts estimates, as a Bloomberg poll of experts predicted the bank would report net profit of Rs 1,270 crore in Q2FY19.

Talking about net profit, Yes Bank highlighted that net Profit declined 3.8% y-o-y to Rs 964.7 Crores which includes impact of Rs 252.2 Crores of one time MTM provisioning, predominantly on Corporate Bonds. After excluding investment related MTM provisions and Profit on Sale of investments Adjusted Net profit grew by 36.2% y-o-y.

On the other hand, the Net Interest Income of the bank came in at Rs 2,417.55 crore in Q2FY19, which was up by 28.24% from Rs 1,885.09 crore in Q2FY18, and higher by 8.94% in Q1FY19. 

Provisions of Yes Bank came in at Rs 939.98 crore which more than doubled compared to Rs 447.06 crore in Q2FY18. The provisions were up by 50.24% from Rs 625.65 crore in Q1FY19. 

Moreover, gross NPAs were at Rs 3,866.08 crore in Q2FY19, increasing by 42.11% from Rs 2,720.34 crore in Q2FY18 and also surging by 36.87% as against Rs 2,824.46 crore in Q1FY19. 

Surprisingly, in percentage terms, gross NPA was at 1.60% IN Q2FY19 versus 1.82% in Q2FY18 and 1.31% in Q1FY19. 

In a notification, Yes Bank said, "Increase in GNPA from earlier disclosed provisional ratio for Q2FY19 (on October 01, 2018) due to classification of one account with exposure of Rs 631.2 Crores as NPA based on post period end review process. Bank expects prepayments and consequent upgrade of this exposure in Q3FY19."

Rana Kapoor, Managing Director & CEO, YES BANK said, “YES BANK has once again delivered satisfactory performance across balance sheet growth,
core profitability and asset quality amidst external environmental challenges. Advances growth has been well segmented across Corporate, IBU, MSME and Retail Business."

Kapoor added, "Moreover strong deposit growth with rising proportion of granular deposits (CASA + Retail FDs) is testament to the leverage created across people, branches and technology over the past few years. Inherent strength of the franchise has also been corroborated by recent re-iteration of ratings by various international and domestic credit rating agencies."

Net Interest Margin remained stable at 3.3%.

Advances grew by 61.2% y-o-y to Rs 2,39,627.5 Crores with stable growth across segments. Retail Banking Advances grew 103.0% y-o-y to 14.3% of advances in comparison to 11.4% in Q2FY18. 

Total Deposits grew by 41.0% y-o-y to Rs 2,22,837.9 Crores. CASA ratio at 33.8%. 

Ahead of the result announcement, Yes Bank stock closed at Rs 198.35 per piece down by Rs 5.65% or 2.77%.