'MIB which is a part of retail, will grow in the range of 20 per cent.'
Yes Bank's net profit jumped 59 per cent year-on-year to Rs 801 crore in Q1, driven by a solid rise in both net interest income and non-interest income.
Yes Bank managing director and chief executive officer Prashant Kumar spoke to Subrata Panda/Business Standard in an interview in Mumbai on the bank's growth plans and succession planning.
The bank's loan growth in Q1 was lower than its peers and the industry. What's your view?
We have taken a very strategic call to grow only in those segments which are profitable.
We have said we would be looking for profitable growth.
On the retail side, we grew by 0.3 per cent in Q1.
But within retail, we have retail assets and the microenterprise business (MIB) that has grown by 11-12 per cent.
But there was slight de-growth in the retail assets because we are not there in the two large components - prime home loans and new car loans -- that do not make money for us.
Do you stick to your guidance of 10-12 per cent loan growth in FY26?
Yes, absolutely. We are hopeful we would be able to grow in that range.
Where do you see that growth coming from in the next few quarters?
The commercial banking segment would continue to grow for us. MIB, which is a part of retail, will grow in the range of 20 per cent.
The moment retail asset growth touches 10 per cent, our overall growth would be around 10-12 per cent.
We are cautious on unsecured retail. Our credit card book is growing, but we are again cautious on personal loans.
Would you say your loan growth target is on the conservative side?
No, I think if we decided to grow in the prime home loan and car loan segments, we would have 15 per cent growth.
But that does not make sense for us. The important part is profitable growth. So, the products which are secured and give a good yield, we are going there.
The board only sought a six-month extension for you from RBI. What was the rationale behind this decision?
Transition is around the corner. The new investor would join the group in some time.
There was a thought process that since a new investor with 20 per cent stake is coming, they should be given an opportunity to have a say in the succession.
I think that is a very fair deal. And that is why we asked for a six-month extension, expecting that this deal would conclude by September.
And then the board collectively can make the recommendation to the RBI.
Would you be in the fray to lead the bank even after the new investors join the bank?
No, it is not a question of whether I am in the fray.
Collectively the board will decide with new investors what is going to be good for the bank.
Once the deal fructifies, do you think SBI will sell its remaining stake in the bank?
SBI will have a remaining 11 per cent stake in the bank. So, there is no compulsion for them to sell that.
They will be below 15 per cent. According to regulation, that is the only requirement.
How do you see the bank's net interest margin (NIM) trajectory going forward?
A rate cut of the first 50 basis points (bps) has been passed on.
But the rate cut of the second 50 bps has to be passed on by the entire banking industry over a period of three months.
The entire book, which is linked to your external benchmark, would be revised. So, we will see an impact on the NIMs.
Feature Presentation: Aslam Hunani/Rediff
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