YES Bank Q3 results: Profit to surge up to 10 times, NII 2-5%; slippages to moderate

YES Bank is likely to report up to 10 times surge in net profit for the December quarter on a 2-5 per cent rise in net interest income (NII). Net interest margin (NIM) is expected to be stable at 2.3 per cent sequentially. The bank's focus has shifted towards rebuilding the business and the management commentary would likely be on growth and return to normalised levels of business operations, analysts said.

Emkay Global expects YES Bank to report a 706 per cent YoY surge in net profit at Rs 415.10 crore against Rs 51.50 crore in the same quarter last year. NII is seen rising 4.5 per cent YoY to Rs 2,059 crore from Rs 1,970.60 crore.  "We expect margins to remain largely flat, which coupled with some moderation in LLP should support profitability. Slippages are expected to moderate QoQ," Emkay Global said.

Nomura India sees YES Bank Q3 profit at Rs 310 crore, up 508 per cent YoY. NII is seen rising 4 per cent YoY to Rs 2,050 crore. Core pre-provision operating profit is seen at Rs 830 crore, up 7 per cent. Nomura India is expecting loan growth at 12 per cent and deposit growth at 13 per cent. Credit cost was seen at 1.8 per cent, down 92 basis points YoY. Return on asset is seen at 0.1 per cent.

ICICI Securities expects profit to come in at Rs 503 crore, up 876 per cent (9.76 times). This brokerage sees NII at Rs 2,009.50 crore, up 2 per cent YoY. ICICI Securities sees slippages falling 25.5 per cent YoY to Rs 1,200 crore from Rs 1,610 crore YoY.  It sees NIM at 2.32 per cent against 2.3 per cent in September and 2.5 per cent in the same quarter last year.  

"We expect a near flat/decline in NII growth by slower loan growth (11 per cent YoY, 4 per cent QoQ) and rising cost of funds. Business momentum is gaining traction, primarily in the retail and MSME segments, but overall loan growth is likely to be lower than the industry average. Deposit growth at ~13% yoy is comfortably
meeting business requirements. We expect NIM at 2.7 per cent (decline of 10 bps qoq), but there is likely to be a lot of volatility, given the nature of income booked when security receipts mature," Kotak Institutional Equities said.  

Kotak said YES Bank should see healthy traction on recovery and upgrades for the December quarter, mostly reflected in changes to the value of security receipts. Earnings impact is difficult to forecast, given the nature of the provisioning policy, it said.