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An accounting twist gifts ‘Yes’ a profit in Q4, but it is still a ‘No’ bank

At the end of March and after an unprecedented mega bail-out, Yes Bank still has a broken balance sheet and its continuation as a going concern depends on several ifs and buts.

May 07, 2020 / 09:03 PM IST

Yes Bank’s fourth-quarter numbers, released on Wednesday night, showed a surprise profit of Rs 2,629 crore. But the celebration was short-lived.  That was an accounting twist if one adjusts the amount net of taxes received from write-down of AT1 (additional tier 1) bonds, around Rs 6,297 crore. Exclude this one-off, the bank has posted a loss of Rs3,668 crore.

But that’s not the story here.

At the end of March quarter and after an unprecedented mega bail-out early this year, Yes Bank still has a broken balance sheet. Its continuation as a going concern depends on several ifs and buts. Investors and analysts look at its numbers with suspicion. The ship isn’t past the stormy waters yet.

What is missing in Yes Bank is what it needs most now—trust. The bank has seen major erosion in deposits in the March quarter as people moved to safer banks. Advances have declined sharply.  And its capital ratios are way below the Reserve Bank of India’s norms.