Last Updated : May 07, 2020 09:03 PM IST | Source: Moneycontrol.com

Yes Bank Q4 losses widen to Rs 3,668 crore; gross NPAs at 16.8%

If the profit after tax (PAT) figure were to be adjusted with an extraordinary income of Rs 6,297 crore from the writedown of additional tier- 1 (AT1) bonds, the bank would show a profit of Rs 2,628 crore.

Crisis-ridden private sector lender Yes Bank, which had to be bailed out by a group of banks led by State Bank of India in March this year, posted a net loss of Rs 3,668 crore in the quarter ended March on account of higher provsions, or the money set aside to cover risky loans. The loss posted in the three months to March 2020 more than doubled compared with the Rs 1,507 crore loss the bank posted a year ago.

Yes Bank showed an extraordinary income of Rs 6,297 crore (net of tax) from the writedown of additional tier- 1 (AT1) bonds in its profit and loss account. If that amount were to be adjusted with the profit after tax (PAT) figure, the bank would show a profit of Rs 2,628 crore.

Most notably, the gross non-performing assets (GNPAs), or bad loans, of the bank stood at 16.8 percent compared with 3.22 percent a year ago. Compared with the December quarter, the gross NPAs have eased up a bit from 18.87 percent in December. Net NPAs in the March quarter stood at 5.03% compared with 5.97 percent in the December quarter and 1.86 percent in the year ago quarter.

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The bank's deposits have shrunk to Rs 1.05 lakh crore, down 54 percent compared with Rs 2.27 lakh crore in the year ago quarter while advances declined 29 percent y-o-y to Rs 1.7 lakh crore from Rs 2.4 lakh crore in the year-ago quarter. The capital adequacy ratio under Basel-III fell to 8.5 percent from 16.5 percent in the year ago quarter.

After Yes Bank collapsed on account of years of careless lending and alleged financial irregularities, the Reserve Bank of India came with a reconstruction scheme to save the bank in March. State Bank of India and a clutch of lenders including HDFC Ltd, ICICI Bank, Kotak Mahindra Bank, Bandhan Bank, Federal Bank and IDFC First Bank invested in the bank. These lenders hold a majority stake in Yes Bank now. The RBI also superseded the board with former SBI official Prashant Kumar and reconstituted the board.

During the bailout, the only class of investors who were left out was the additional tier 1 bond holders of the bank, whose investments worth Rs 8,415 crore were written off by the ban. But this has dragged the bank to endless courtroom battles after investors represented by Axis Trustee moved to Bombay High Court seeking court’s intervention into the matter. That apart, hundreds of retail investors whose money is stuck in AT1 bonds are also likely to move courts seeking judicial intervention into the matter.

A closer look at the financials of the Yes Bank’s fourth quarter numbers shows that asset quality situation has slightly improved. For instance, the loans under the special mention accounts (SMA) of Yes Bank have dropped a little compared with the December quarter. However, the next big challenge for Yes Bank will be to augment its capital on account of poor capital adequacy ratios. The CET 1 ratio (common equity tier 1 ratio) and the Tier 1 capital ratio for the Bank as of March 31, 2020 stood at 6.3 percent and 6.5  percent compared with the minimum requirements of 7.375 percent and 8.875 percent, respectively. "This implies that the Bank will have to take effective steps to augment its capital base in the year 2020-21," auditors noted.

But capital is unlikely to be a concern for the bank given that it has the backing of half of India’s banking industry as promoters and that of the Reserve Bank, which facilitated the bailout.Yes Bank co-founder Rana Kapoor is presently facing investigations for alleged quid-pro-quo deals involving DHFL promoters, the Wadhawans, with respect to certain real estate transactions.

Kapoor was denied an extension as bank’s chief by the RBI in late 2018 after the central bank found major divergence in the reported bad loans of the bank and what its investigations unearthed during the course of a probe. Ravneet Gill, a former Deutsche bank veteran, took charge as Yes Bank CEO in March, 2019. But despite constant efforts to find investors, Gill couldn't win the confidence of investors. Eventually, the bank's board was superseded by the RBI and was taken over by the bank consortium.

Also Read | Yes Bank appoints Neeraj Dhawan as chief risk officer

Gill, in his statement to the Enforcement Directorate, has raised questions about Kapoor's actions and pinned the blame on him for the bank's downfall.

Also Read | Former CEO Ravneet Gill puts the blame on Rana Kapoor for Yes Bank collapse    

SBI, HDFC, Axis Bank, ICICI Bank, Kotak Mahindra Bank, Bandhan Bank, Federal Bank and IDFC First Bank together invested Rs 10,000 crore in Yes Bank.

Yes Bank rescue: Three private lenders trim stake within weeks of investing

In the past one year, the stock has fallen 84 percent, while it was down 52 percent during March quarter, and 43 percent year-to-date.

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First Published on May 6, 2020 10:53 pm
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