Yes Bank, the beleaguered private lender which needed a government bailout to stay aloft, finally revealed an earnings scorecard — late in the night — which was as disastrous as was widely believed.
Losses soared significantly, deposit base wilted sharply and bad loans, or non-performing assets (NPAs) swelled drastically and its ability to absorb losses withered, all of which underscored why it was imperative for the Reserve Bank of India (RBI) to impose limits on withdrawals to prevent a run on deposits and launch a rescue act for the bank.
Yes Bank reported a loss of Rs 18,564 crore at the quarter ended December compared with a rise in profit of Rs 1001.8 crore a year ago, dragged down by a precipitous rise in bad loans and severe decline in deposit base, it said in a statement.
It posted a net loss of Rs 600.08 crore in the previous quarter.
The bank's gross NPAs shot up to 18.87 percent in the given quarter, as against 2.10 percent in the year-ago period and 7.39 percent in previous quarter.
Yes Bank's capital buffers plummeted to below regulatory mandates, its results revealed. The CET1 ratio (a measure of a bank's capacity to absorb potential losses) stood at 0.6 percent as against minimum requirement of 7.4 percent implying massive impairments.
Its net interest income, the difference between interest earned and interest expended, fell considerably by 60 percent year-on-year to Rs 1,064.78 crore, and the sequential decline was 51.23 percent.
Gross non performing assets (GNPA) stood at Rs 40,709 crore as against Rs 17,134 crore on a quarter-on-quarter basis and net NPAs were at 5.97 percent versus 4.35 percent.
The bank said it increased bad loans provisions to Rs 24,765 crore in the December quarter as against Rs 1,336 crore in the previous quarter.
A bank's mainstay, deposits, fell by Rs 44,000 crore. Yes Bank said, as on March 5, its deposits stood Rs 1.37 lakh crore, down from Rs 2.09 lakh crore.
The bank's operating loss for the quarter stood at Rs 6.42 crore, against profit of Rs 1,990.36 crore in the year-ago period, while the non-interest income (other income) dropped to Rs 625.66 crore in Q3FY20, from Rs 890.87 crore YoY.
The downbeat performance comes after the RBI rescue plan was followed by India's largest private banks, including State Bank Of India, joining hands to keep Yes aloft. Yes was billed as one of the brightest stars on the Indian banking horizon.
The 16-year old bank said it was “made aware” of anonymous whistleblower complaints against irregularities in operations and conflict of interest against former MD and CEO Rana Kapoor in September 2018. Authorities have launched investigations against Kapoor, who was detained and faces several charges, including a case of money laundering, registered against him
Yes said it conducted an internal enquiry supervised by its board and the report reviewed by Board in November 2018. The bank said it then engaged an external firm to independently examine the matter in December 2018. The bank received two reports since.
Much of Yes’ troubles seed from the reckless lending by Kappor, according to multiple banking analysts and experts Moneycontrol spoke to.
Earlier in the day, the central government appointed former SBI banker Prashant Kumar as the new Chief Executive Officer of the financially troubled Yes Bank.
Accordingly, the former Chief Financial Officer and Deputy Managing Director of State Bank of India (SBI) will take over his new responsibilities once the moratorium on the stressed lender is lifted on Wednesday, a Finance Ministry notification said.
At present, office of the Administrator appointed by the RBI has taken the charge of the bank till the date of moratorium cessation.
Apart from Kumar, Sunil Mehta, former Non-Executive Chairman of Punjab National Bank will take over as the Non-Executive Chairman of Yes Bank.
Other board members include Mahesh Krishnamurthy and Atul Bheda, both as Non-Executive Directors.
(With agency inputs)
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