After completing his first quarter as the CEO of Yes Bank, Ravneet Gill said that he is assured that the “house is in order” and slippages are under control as the lender plans to raise capital by September-end to refocus on growth.
“The capital that we need is purely growth capital and is not capital that is being sought for absorption buffers or provisioning,” Gill said in an earnings call on July 17.
He added that he does not expect any slippages outside the bank’s bad loan watchlist. Also, the bank’s internal profits for the next eight quarters will be enough to cover the provisioning needs for slippages from sub-investment grade book.
Yes Bank’s Common equity Tier-I capital took a hit of 46 basis points in the April-June quarter to end at 8 percent, which is the minimum regulatory requirement to be maintained by March 2020. This despite providing Rs 1,399 crore against bad loans from the contingency pool of Rs 2,100 crore that the bank had set aside in the March-ended quarter.
However, Gill said that the bank is not likely to drop below the capital adequacy threshold. He added that the bank’s sub-investment grade book has bottomed out and he expects “material reduction” in the book on the back of ongoing resolutions.
As on June 30, the bank’s ‘BB and below’ rated loans stood at Rs 29,470 crore.
The bank reported gross non-performing assets (NPA) ratio at 5.01 percent and net NPA ratio at 2.91 percent in the April-June quarter. The gross slippages were at Rs 6,232 crore during June quarter. "Net corporate slippages were entirely from the accounts classified as BB and below at the end of Q4 FY19,” it said.
Analysts said that after a massive clean-up drive, raising capital is the next big task for Gill, who took over the reins in March 2019. Last month, Gill said that the bank plans to raise $1.2 billion capital over 18 months via the sale of shares.
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