Private lender YES Bank will report its third-quarter earnings later on Saturday. The company is likely to report a robust growth in its prfit after tax (PAT), while the net interest income (NII) will be muted, according to analysts.

The profit growth is seen upwards of 300%, while net interest income is likely to grow around 2% year-on-year in the October-December period. Some analysts are even predicting a decline in the NII due to slower loan growth and the rising cost of funds.

The lender posted 47% growth in net profit at Rs 225 crore in the September quarter, while total income from operations increased by 25% to Rs 7,921 crore.

Deposits and loan growth

YES Bank reported 12% growth in its advances at Rs 2.17 lakh crore in the second quarter, compared with Rs 1.94 lakh crore in the last-year period. On a sequential basis, deposits rose 4%. Deposits in the same period were up 13% year-on-year to Rs 2.41 lakh crore. The same was up 3.2% quarter-on-quarter.

At the end of the September quarter, the lender’s deposits stood at 2.34 lakh crore and advances were Rs 1.92 lakh crore, of which retail advances were just over Rs 1 lakh crore.

Analysts take

Analysts said the 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% year-on-year is comfortably meeting business requirements. We expect NIM at 2.7%, but there is likely to be a lot of volatility, given the nature of income booked when security receipts mature,” said Kotak Equities.”We should see healthy traction on recovery and upgrades this quarter. Earnings impact is difficult to forecast, given the nature of the provisioning policy,” it said.

Asset Quality

The bank has significantly improved its asset quality in the second quarter to just 2% from 12.9% a year ago. Investors would keep a close watch on the non-performing assets of the bank in the third quarter too.

Key things to track

In the earnings card, investors would keep an eye on the commentary around rebuilding the business for the bank. Conversations would also be on growth and return to normalized levels of business operations.

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