YES Bank’s retail shareholder base has crossed the five million mark. MD & CEO Prashant Kumar tells Piyush Shukla the lender could look at portfolio buyouts, co-lending and even an acquisition of a microfinance company in the next 12-18 months to help meet the priority sector lending (PSL) norms. Excerpts:
How do you plan to address the shortfall in the PSL?
We have seen a drag of almost 40 bps on our RoA (return on assets) because of the shortfall in PSL, which we need to put in RIDF (Rural Infrastructure Development Fund). This year we will try to solve this problem because this is a drag on our profitability. We could go for inorganic growth, especially in the category of the small and marginal farmer loans. It could be a combination of co-lending, a portfolio buyout and if possible an acquisition of a microfinance entity.
What is your guidance on deposit growth for FY24?
Our year-end numbers show a 10.2% growth in deposits, and I think we would continue to grow these numbers without increasing the rate of interest. We are targeting an end-of-year growth of around 20% and are quite confident that we will be able to achieve this. Most of the deposits would be coming from the retail side.
We opened more than 1.3 million CASA deposit accounts last year or roughly around 1,30,000 accounts every month. In the current year, this could go up to 1,50,000 -1,60,000 a month. So by the end of current financial year we would have opened between 1.5 million-1.8 million CASA accounts.
How do you plan to grow your loan book in FY24?
On the retail side, we would continue grow by 30%-plus over the last year and we would like to grow the MSME portfolio by 25%-30%. The mid-market segment, too, could grow by more than 30%. As far as large corporates are concerned, we think the de-growth has now peaked out. So our large corporate book would either remain stable or achieve single-digit growth this year. I think a rise of 15%-20% on the loans side can be easily achieved by us.
Any potential MFIs that you have identified for an acquisition?
In principle, we would be looking to solve the PSL problem and an acquisition can be one of the solutions, but this is too early to say anything. I think the acquisition, especially if you talk about an entity would take a little longer but definitely 12-18 months is a timeline by which we would look to close out something.
What is your outlook on asset quality for current fiscal?
We would like to see if the slippages can be contained between 1%-1.5% given the slippage ratio is currently at 2.5%. Also, the GNPA (gross non-performing asset ratio) number, though it is very low we do not see it going up. , However, the NPAs will definitely continue to see a downward trajectory. Already net NPAs have come down to 0.8% and we would like to see it come down further.
How does YES Bank benefit from having the largest retail shareholder base of over 50 lakh investors?
We are very happy that such a large number of retail investors continue to have confidence in us. We are fully aware that it has been a long time since we have rewarded our investors. At the same time, we need to appreciate that three years back we were in a situation where this franchise was about to be closed down. It is probably the only case in the entire world where a large financial bank has been in trouble and has been able to come back as an independent financial entity. So I think yes, our investors need to have a little more patience and continue to have this confidence. Both the management and the board is aware that, that going forward we need to take care of the interests of all stakeholders.
Will you offer any dividend in the current fiscal?
I am not making any comments on this as it is something that depends on policy and the Board, what kind of earnings are there and after taking care of all those things the appropriate decision will be taken at the right time.