Shares of YES Bank witnessed volatile trade on Monday, in an otherwise positive broader market, after the private lender released its December quarter results over the weekend, which fell short of market expectations. The bank has posted robust growth in its Q3 profit, aided by a fall in loan-loss provisions, credit growth, and higher income. The lender’s board has also approved the transfer of the investment banking and merchant banking business of YES Securities Ltd., its subsidiary, to itself, effective from January 1, 2024.

Reacting to Q3 numbers, YES Bank shares opened 2% higher at ₹25.38 against the previous closing price of ₹24.88 on the BSE. Extending opening gains, the stock rose to ₹25.50 level in early trade, but soon pared gains to slip into negative terrain. In the first hour of trade so far, the banking stock dropped as much as 1.5% to ₹24.50, while the market capitalisation slipped to ₹70,980 crore.

The shares of YES Bank touched its 52-week high of ₹26.25 on January 16, 2024, while it slipped to a 52-week low of ₹14.1 on October 23, 2023. In the last one year, the counter has risen 44%, whereas it rallied 45% in six months and 15% in a month.

YES Bank released its earnings report on Saturday, posting a net profit of ₹231 crore in Q3 FY24 as compared to ₹51 crore in the year ago period, which was hit by higher provisions after the lender transferred its bad loans to private equity firm J.C. Flowers. The profit for the quarter was lower compared with the ₹415.1 crore estimated brokerage Emkay Global.

The Mumbai-based bank’s net interest income, the difference between the interest earned on loans and that paid to depositors, rose 2.33% to ₹2017 crore, from ₹1,970.6 crore in the same period last year. The other income grew to ₹1,254 crore from ₹1,112 crore during the year-ago period. The net interest margin fell to 2.4% from 2.50% a year earlier, but increased sequentially by 10 basis points, from 2.30% reported in the September quarter.

The bank’s asset quality remained stable during the quarter, with gross NPA remaining flat at 2%, while net NPAs improved to 0.9% from 1% in the year ago period. In absolute terms, the gross NPAs stood at ₹4,457 crore and net NPA at ₹1,934 crore as of December 31, 2023.

The bank’s provisions fell sharply to ₹554.7 crore in Q3 FY24, compared to the ₹844.7 crore in the same quarter last year. However, sequentially provisions rose from ₹500 crore in the September quarter of the current fiscal.

In a separate release, the board approved a proposal to transfer investment banking and merchant banking business of YES Securities (India) to the bank, saying that the move will leverage opportunities and optimise growth within the group. “YSIL, the wholly owned subsidiary of the Bank, shall continue to focus on its core business activities which inter-alia, includes broking business.”

The bank also informed that there will be no change in shareholding pattern of the YES Bank and YES Securities. YSIL, the wholly owned subsidiary of the bank, can focus on its broking business and further explore cross selling opportunities to retail clients with client centricity as the core philosophy, it added.

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