YES Bank, a private lender, is expected to report flat or declining net interest income (NII) due to sluggish loan growth and increased funding costs.
However, given the low foundation of last year, net profit for the September 2023 quarter is predicted to more than quadruple. Given the nature of the provisioning strategy, analysts believe the profit impact will be difficult to predict.
Net profit for the quarter is expected to rise up to 137% year on year (YoY), but may fall sequentially. NII growth, on the other hand, is expected to be about 1%, with a 1-2% drop.
The bank’s attention is moving toward reconstructing the business, and investors should keep an eye out for commentary on growth and a return to normalized business operations.
YES Bank increased its profit by 10% to Rs 342.52 crore in the June quarter.
“With improvements in its business updates aided by solid CASA and retail deposits in Q2FY24, NIMs is projected to sustain amidst the compression seen in the industry,” stated Shreyansh Shah, Research Analyst at StoxBox.
Shah went on to say that the bank is now concentrating on growing its granular loan book and that the change towards granularization has improved the firm’s profitability in recent quarters.
“Though the bank has strengthened its asset quality due to increased provisions and write-offs, the gross and net NPA levels are still relatively higher than its peers.”
Analysts anticipate the following results from YES Bank in the second quarter:
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Business activity is building, notably in the retail and MSME areas, although total loan growth is expected to be lower than the industry average of 7% year on year. A deposit increase of 14% year on year meets the needs of the business.
We forecast NIM at 2.8%, but given the type of income booked when security receipts mature, there is likely to be significant fluctuation. We should expect to see healthy…
Net interest income is predicted to increase 2% year on year to Rs 2,031 crore, while PAT is expected to increase 137% to Rs 362 crore. The bank’s pre-provision operating profit (PPOP) would drop by almost 7% to Rs 738 crore.
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ICICI Securities Limited
YES Bank’s net interest income is expected to fall 0.7% year on year to Rs 1,978 crore. NII is expected to dip 1% sequentially. In the reporting period, net profit is predicted to increase 157% to Rs 392 crore.
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