Core income perks up Yes Bank net 28%; eyes MF buyout

Private sector lender Yes Bank Wednesday reported 27.7 percent rise in net profit to Rs 551.20 crore during the first quarter ended June 30, 2015-16, on higher net interest income.

Mumbai: Private sector player Yes Bank, which on Wednesday reported 27.7 percent growth in net profit at Rs 551.2 crore on higher core income in the June quarter, said it is looking at entering the mutual fund business possibly through an acquisition.

Its core net interest income during the first quarter of 2015-16 rose 42.2 percent to Rs 1,060 crore, while non- interest income moved up 32 percent to Rs 413.6 crore.

The bank's net profit during the April-June quarter of the previous fiscal was Rs 431.54 crore. Its total income also increased to Rs 3,797.02 crore, as against Rs 3,093.19 crore in the year-ago period.

Yes Bank's Chief Financial Officer Rajat Monga said a dip of over 0.50 percent in the cost of funds year-on-year and an increase in the share of the low cost CASA deposits to 23.4 percent, helped the bank net in a 0.30 percent improvement in the net interest margin to 3.30 percent.

He also hinted that the bank is entering the mutual fund fray with an acquisition.

"We are open to both (buying and starting up our own). If we don't succeed in an acquisition in the AMC space, we will have to do one by ourselves. But we have no dialogue which is approaching a deadline or approaching a decision," he said.

When asked if the bank has applied for starting the MF business, Monga said it has the board's approval and the "licence is under application". He refused to elaborate.

The 12-year-old bank has grown to have a presence in a majority of businesses on the lending side and allied ones, but lacks a presence in the MF and insurance businesses unlike a majority of its peers, thereby limiting its fee-based income.

However, Monga was quick to add that the MF business is not so profitable and majority of the small-sized AMCs are not making lots of money. He also said the bank is not in talks to take over beleaguered Sahara group's AMC.

Like its peers, Yes Bank also saw its gross bad loans inching up to 0.46 percent from 0.33 but he Monga claimed that asset quality is stable and slippages have come in from the SME and retail fronts.

Provisions of Yes Bank shot up over three-times to Rs 98 crore during the first quarter of the current fiscal, as against Rs 23.7 crore a year ago, which included Rs 40 crore for standard assets and Rs 45 crore for NPAs, he said.

It restructured Rs 180 crore of loans, including two accounts from the road sector. They had to be recast due to delay in the project, Monga said, adding that he is confident that the accounts will turn standard soon.

The bank, which has drawn up plans to open a branch at the country's first international financial centre at the GIFT City in Ahmedabad, has got the board approval to raise up to USD 1 billion through an international bond sale and will mop up USD 300-500 million in the next five months, he said.

It has also drawn up plans to raise up to Rs 800 crore in tier-II bonds by the end of the year, Monga said.

On core equity raising under the previously announced plan, Monga said the view is to do an ADR issue in the latter part of the current fiscal year and added that there are some regulatory issues to be sorted out.

The bank scrip closed 2.65 percent up at Rs 815.70 on the BSE, as against a 0.38 percent rise in the benchmark Sensex.

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