Yes Bank, which was bailed out last March by a consortium led by the State Bank of India, has swung to a profit of Rs 151 crore in the December quarter from a loss of Rs 18,560 crore a year ago.

The turnaround was on the back of higher loan disbursements to individuals and small and medium enterprises. Fees and trading income also saw strong growth.

Yes Bank managing director and CEO Prashant Kumar said this is the third straight quarter where the bank has shown a rise in profits. Continuing with its de-risking strategy, the bank was cautious in lending. Advances saw a growth of just 1.7% to Rs 1.69 lakh crore.

But the bank almost doubled its disbursements to retail and small business segments in the December quarter to Rs 12,000 crore, from Rs 6,800 crore in the preceding quarter. Corporate disbursements, consisting of mainly working capital for mid-sized companies, stood at Rs 2,000 crore.

The bank is looking to disburse a similar level in the fourth quarter, Kumar said.

In FY22, the bank has set a credit growth target of 12%, which will be driven largely by a 20% growth in retail, Kumar said. A larger share of the incremental advances will keep going to retail, which now forms 28% of the overall book as of December, he added.

Yes Bank had to restructure Rs 8,000 crore of assets and another Rs 7,000 crore are standstill non-performing assets (NPAs). These would have been classified as NPAs but for the Supreme Court order not to classify them as such because of the Covid-related stress.

While the reported gross NPAs for the quarter were 15.36%, it would have climbed to 20% if the newly created stressed pool of restructuring and standstill NPAs were added. This would have been higher than what the bank had experienced in the year-ago period after the accelerated recognition of stress, Kumar admitted.

According to Kumar, over 15% of the stress is temporary, arising because of the Covid in legacy accounts. The sticky NPAs are only 4% of the reported gross NPAs, he said.

The bank’s overall provisions stood at Rs 2,198 crore versus Rs 1,187 crore a quarter ago. This included over Rs 765 crore for Covid-related provisions, he said.

"Out of the restructured book, we are not seeing any risk at all. This would be standard restructuring. The NPAs are not sticky NPAs, more temporary. The improvement will happen very fast," he said.

The bank had cash recoveries of nearly Rs 1,500 crore in the December quarter. The aim is to recover another Rs 2,000 crore in the fourth quarter, Kumar said. In the first nine months of the fiscal, overall recoveries, mostly corporates, stood at Rs 2,900 crore and over Rs 2,430 crore have been written back as profits.

Net interest income stood at Rs 1,197 crore, up by nearly 70% compared to the September quarter. But Kumar said part of it will have to written-back once the Supreme Court judgment on standstill accounts comes in.

Net interest margin was at 3.4%, but Kumar feels this is not sustainable after the SC rules on standstill accounts as there will be interest outgo. The target is to maintain the number above 3% in FY22, Kumar said