Yes Bank's bad loans sour golden jubilee moment; net NPAs treble
The mid-sized private lender’s gross non-performing assets (NPAs) in absolute terms doubled to Rs 2,018.56 crore compared to Rs 1,005.9 crore in the previous quarter.
Yes Bank’s 50th quarter was not quite the “golden jubilee” moment as gross bad loans doubled and net bad loans trebled.
The mid-size private sector lender had to set aside more money towards these loans after an RBI circular the previous day asked banks to disclose the divergence in asset classification by the regulator and provisioning by banks.
Rana Kapoor, the bank’s MD and CEO said, “The reasons for the spike in NPAs and consequent provision is driven by the conformity with the divergences observed by the RBI as per its compliance process referred to in the RBI circular dated April 18. This is largely due to one single borrower, the exposure of which stood at Rs 911 crore.”
Without mentioning the name of the borrower, Kapoor went on to add that the large borrower’s account was of a large cement company from North India, alluding to the debt-laden Jaiprakash Associates. He added that the bank expects this loan to be recovered in the near term.
The mid-sized private lender’s gross non-performing assets (NPAs) in absolute terms doubled to Rs 2,018.56 crore compared to Rs 1,005.9 crore in the previous quarter. From a year ago, the gross NPA figure jumped 169.51 percent from Rs 748.98 crore.
In percentage terms, the gross NPA figure stood at 1.56 percent of the loan book from 0.85 percent sequentially. Net NPAs for the bank stood at 0.81 percent (Rs 1072.3 crore) compared to 0.29 percent (Rs 342.4 crore) sequentially.
Provisions for the quarter jumped nearly three-fold sequentially to Rs 309.73 crore compared to Rs 115.4 crore in the previous quarter. Of the provisions, Rs 227.9 crore were from the one large borrower mentioned above.
In mid-2015, a UBS report raised a red flag on Yes Bank stating that it had the highest share of loans backed by unlisted shares and current assets (23 percent) and added the bank is most vulnerable to a large corporate default. The report was based on Yes Bank's filings with the Registrar of Companies.
However, Yes Bank had contested it saying UBS did not seek Yes Bank’s views before coming out with the report, which it claimed had exaggerated the exposure of the bank to stressed companies given the RoC filings were dated and did not reflect the actual disbursement.
On the bank’s profitability, it made a 30 percent growth in net profit after tax at Rs 914.1 crore helped by a 32 percent rise in NII or net interest income of Rs 1,639.7 crore.On Wednesday, Yes bank’s shares ended weaker by Rs 0.50 (0.03 percent) at Rs 1605.40 per share on the Bombay Stock Exchange.