India Yes Bank posts Q4 profit beat on lower provisions

India's Yes Bank YESBANK reported a bigger-than-expected rise in net profit for the January-March quarter on Saturday, helped by a drop in loan-loss provisions and higher non-interest income.

The Mumbai-based private lender's standalone net profit more than doubled to 4.52 billion rupees ($54.2 million) for the financial fourth quarter from 2.02 billion in the same period a year earlier.

That exceeded analysts' average forecast of 3.41 billion rupees, according to LSEG data.

Provisions and contingencies, or funds kept aside for potential bad loans, fell to 4.71 billion rupees from 6.18 billion.

Its gross non-performing asset ratio improved to 1.7% at the end of March from 2% at the end of December.

The bank's other income – the fees earned from providing non-lending services to customers – rose 56.2% year-on-year.

Net interest income, the difference between the interest earned on loans and paid to depositors, rose 2.3% to 21.53 billion rupees.

Net interest margin (NIM), a key profitability measure for banks, dropped to 2.4% from 2.80% a year earlier, and was flat on a quarterly basis.

Most Indian banks have been shoring up their deposit base amid tightened liquidity conditions in the banking system and healthy demand for loans. That has weighed on their lending margins.

Yes Bank's loans grew 12.1% on year, while deposits rose more than 22%.

Yes Bank expects deposit growth of 18.5% and loan growth of 17% in the current financial year, the bank's Chief Executive Prashant Kumar told reporters on a conference call.

The bank held high-cost deposits in the form of so-called Rural Infrastructure Development Fund balances, that impacted NIMs by around 70 basis points (bps), Chief Financial Officer Niranjan Banodkar said on the same call.

A gradual scale-down of these deposits will help improve NIMs by 80-100 bps over the next two to three years, Banodkar added.

($1 = 83.4000 Indian rupees)