Yes Bank expects 15% loan growth in FY22: Prashant Kumar, managing director and chief executive officer

Overall, I think there would be some impact, but not much.

Yes Bank is expecting a loan growth of 15% in the current financial year (FY22). In an interview with Ankur Mishra, managing director and chief executive officer Prashant Kumar says 15% credit growth in FY22 will not be difficult as the bank has disbursed Rs 15,000 crore even in the March quarter. He says current wave of Covid-19 will have some impact, but not to the extent of last year. Excerpts:

What is your assessment on the impact of pandemic? Has the bank done any stress test?
This is too early. My reading is that economic impact will not be that much, compared to what happened last year. Last year was complete lockdown, everything was closed. It came to almost zero, but this year there are only restrictions. Lot of activities are happening. But definitely there is going to be some impact. Last month, we have seen all-time-high GST collections of Rs 1.4 lakh crore, industrial production is happening, movement of goods are happening. So, once we hit the peak, it will start coming down. And now we have the vaccine available. So, economic recovery will happen much faster.

How has been collection efficiency in the March quarter (Q4FY21) and during April? Has there been some impact of Covid-19 so far?
We have reached to the pre-Covid levels during the March quarter as far as collection efficiency is concerned. In the March quarter, our collection efficiency remained somewhere around 96%. In the first 15 days of April, we were at the same level. We are still awaiting data after April 15. Overall, I think there would be some impact, but not much.

You have managed your credit deposit (CD) ratio at 102% in Q4 in line with the target to keep it around 100%. Now, as the deposits are growing rapidly, how do you plan to keep the balance?
On the deposits part, we are continuously reducing rates. Last one year, we have reduced more than 100 basis points (bps) on fixed deposits (FDs). On the savings side also, we have reduced rates. Basically, we have to keep balance in deposits growth in terms of what are the opportunities for credit. We are looking for a credit growth of around 15% for overall book. And if credit growth is 15%, deposits has to grow more than 15%. But definitely not at a very high rate. We are not looking to gain market share in deposits or remain very aggressive, but it is more in terms of managing our asset liability. So, if we see due to liquidity more deposits would be coming, we will further reduce our rate of interest.

What gives you confidence for loan growth of 15% in FY22?
I think that should not be difficult because even in the last quarter we have disbursed Rs 15,000 crore. It is not reflecting in our number as we have made additional provisions which reduce your net loan book. Secondly, we were following a strategy on the corporate side for some of the assets where the concentration was high. So, that exercise is now over. Going forward, it will be only growth. The only caveat is that pandemic should not bring any unexpected surprise.

NII de-growth during the March quarter has been attributed to interest reversals and one-offs. How do you see NII growth going forward?
If you don’t have that kind of slippage, your NII growth will be largely in line with your loan growth. So going forward, double-digit growth of NII should be definitely possible in FY22.

What is your outlook on net interest margins (NIMs)?
We are expecting to reach at 3% till March quarter in the current financial year (Q4FY22).

Overall, you were able to do Rs 4,933 crore cash recovery in FY21. What is your target for June quarter and FY22, considering the pandemic?
It is very difficult to guide for June quarter, but definitely we should be able to reach at least Rs 5,000 crore cash recovery during FY22. Why I am saying this is because we were able to achieve a similar target in six months of FY21 as first two quarters (Q1FY21 and Q2FY21) were almost a washout. And we were immediately recovering from reconstruction and moratorium. The recovery can be more than Rs 5,000 crore during FY22. We can definitely do better than FY21.