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YES Bank to set up ARC by June, raise capital as buffer against uncertainties in FY23, says CEO Prashant Kumar

The lender on April 30 reported its January-March net profit at Rs 367 crore as against a loss of Rs 3,788 crore in the same period last year. This was led by lower provisions, higher net interest income and an improvement in asset quality.

April 30, 2022 / 06:03 PM IST

YES Bank is in the process to form the proposed asset reconstruction company (ARC) and transfer its entire pool of gross non-performing assets (GNPA) amounting to Rs 27,976 crore to the ARC by June 30, the bank’s Managing Director and Chief Executive Officer Prashant Kumar told reporters in a post-earnings press conference.

The private bank on April 30 reported its January-March net profit at Rs 367 crore as against a loss of Rs 3,788 crore in the same period last year. This was led by lower provisions, higher net interest income and an improvement in asset quality.

“We would be expecting that in next financial year (FY23), we would be able to have slippages within 2 percent. Our recoveries and upgrades would outnumber credit cost on account of lower slippage or ageing of NPAs and this we have been able to demonstrate in the last two financial years also,” Kumar said.

Giving more guidance on advances growth for the present fiscal, Kumar said YES Bank will achieve an overall loan growth of over 15 percent, which will be contributed by 10 percent advances growth in the corporate segment and over 25 percent growth in the retail and small and medium enterprises (SMEs). As on March 31, the bank’s total advances stood at Rs 1.81 lakh crore.

During FY22, YES Bank was able to achieve all its guidance except for its target on loan growth and return on assets (RoA). Sluggish credit growth in the corporate sector led to the bank’s failure in achieving its desired target. However, in FY23,  corporate credit growth is likely to pick up and the bank will likely achieve 75 basis points RoA this fiscal, according to Kumar.


“Over a period of time, there has been an improvement in the capacity utilisation of the corporates. Similarly, because of higher input costs, the working capital requirement has also gone up and with better capacity utilisation the possibility of capex coming from the private sector along with the government, which is already there, is also visible,” he said.

YES Bank is also aiming to increase the share of low-cost current and savings account deposits to 35 percent by March 31, 2023, from 31.1 percent as on March end and achieve Rs 5,000 crore of recoveries in FY23, a target met last fiscal.

Further, reports have emerged on foreign private equity players wanting to invest a considerable amount of capital in YES Bank for a 10 percent stake. Kumar did not agree or dismiss such reports, saying the bank is exploring all options to raise funds for growth and creating a buffer against external events and other economic uncertainties.

Without providing any quantum of fund raise, Kumar said the bank will raise capital in the present fiscal.

“Current capital that we are having is sufficient to take care of our growth aspiration for the current financial year also. When we raised Rs 15,000 crore in our FPO in July 2020, I think everyone in the street was expecting that we would come back to market within 12 months, but I think we were very clear that we would not come back in the next two years,” Kumar said.

“…in the current uncertain times, either in the economy or in the geopolitical system, it is also important to have a buffer as a lender. So, I think if there is an opportunity to create that buffer, we will do it at the right time,” he said.

When asked whether YES Bank will join the account aggregator system, Kumar said the initiative is in favour of banks and all lenders must go live on the platform.

“Our view is that this is something which would be very important for the entire banking industry and we should not worry about whether other banks will take advantage. I think every bank should support this initiative, should participate in this and whosoever is good in terms of product, technology and services would be definitely taking the advantage. I think these are the initial stages but we are fully committed to it,” Kumar said.

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Piyush Shukla
first published: Apr 30, 2022 05:54 pm
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