Private sector lender Yes Bank's December quarter earnings were slightly ahead of Street estimates. Net profit rose 30 per cent year-on-year to Rs 540 crore against NDTV poll of Rs 517 crore.
Bottomline was supported by higher other income, which included fee income and treasury gains on bond portfolio, analysts said.
Net interest income, or interest earned over interest expended grew by a robust 37 per cent year-on-year to Rs 909 crore in the three months from October to December 2014, which compares with estimates of Rs 886 crore.
Rajiv Mehta banking analyst at IIFL told NDTV that Yes Bank's net interest income is ahead of their estimates, while net profit was in-line with their estimates.
Yes Bank's net profit was boosted by higher other incomes, which grew by over 38 per cent to Rs 537 crore in the reporting period. Mr Mehta says Yes Bank has higher exposure to bond income, which got a boost due to fall in wholesale interest rates.
Net interest margin, which is a measure of profitability of banks, increased to 3.2 per cent in the December quarter against 2.9 per cent y-o-y. Analysts says net interest margin of Yes Bank got a boost as its cost of fund reduced after the private lender raised funds through QIP.
Yes Bank has got higher exposure to wholesale funding (corporate loans), which got a boost due to fall in wholesale interest rates, say analysts.
However, on a sequential basis Yes Bank witnessed some deterioration in its asset quality. Its gross non-performing assets (GNPA) increased to 0.42 per cent of total advances from 0.36 per cent last quarter. Mr Mehta says rise in GNPA on a sequential basis is not surprising.
Yes bank has been consistently increasing its focus to boost its retail penetration due to which, its CASA ratio--ratio of lower cost deposits to total deposits--increased to 22.6 per cent as against 20.9 per cent y-o-y, boosting its profitability.
Shares in Yes Bank ended 0.6 per cent higher at Rs 786.45 apiece outperforming the broader Sensex, which ended 0.29 per cent lower on Wednesday.