Private lender Yes Bank Ltd on Friday reported a net profit of 129 crore in the quarter ended September against a loss of 600 crore a year-ago. Net profit, which rose 2.8 times sequentially, was driven by lower provisioning and operating expenses.

A Bloomberg poll of six analysts had estimated a loss of 1,178.3 crore.

The bank’s asset quality improved, with gross non-performing assets (NPAs) declining to 16.9% of the total advances, from 17.3% in the June quarter. Net NPAs fell to 4.7% from 4.9%.

Provisions for bad loans declined 11.1% year-on-year (y-o-y) to 1,187 crore. However, it rose 9.3% quarter-on-quarter.

“We have already made a provision of 1,900 crore for covid-19 and this provision takes care of any slippage or any restructuring and any interest reversal on account of these kind of slippages,” said Prashant Kumar, managing director and chief executive officer (CEO), Yes Bank.

Loans of 2,391 crore have not been classified as NPA because of the Supreme Court’s interim order, the private lender said. Most of these loans are from corporate accounts, while retail and micro, small, and medium enterprise (MSME) segments have smaller contributions.

“On the corporate side, we are seeing that there is more stress on certain industries (impacted by the covid-19) such as real estate,” Kumar said.

Net interest income fell 9.7% y-o-y to 1,973 crore, but increased 3.4% from a quarter ago. Non-interest income grew 13.9% sequentially to 707 crore.

“A strong bounce back was seen across transactional and granular fee streams,” the bank said.

Operating expenses declined 21.1% to 1,320 crore y-o-y as the bank saved cost because of branch and ATM rationalization and rental negotiation with landlords and vendors.

“We have engaged with a global consultative firm and are working in terms of how to reduce cost. The cost reduction is now across the spectrum, digitization of segments and rationalization of branch network,” Kumar said.

Yes Bank was on the brink of collapse in March after several attempts to raise capital failed. It was rescued by a Reserve Bank of India (RBI)-led bailout plan under which the State Bank of India picked up 49% equity in the private lender.

Trouble for the lender started when its founder and former CEO Rana Kapoor was not given an extension by RBI in 2018 because of corporate governance issues and under-reporting of bad loans. Kapoor’s term as CEO ended in January 2019.

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