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Yes Bank’s Q4 numbers reflect a worrying picture of its actual stressed assets

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  • The bank has written off Rs 10,323 crore of loans in the fourth quarter compared with Rs 1,747 crore in Q3 of FY21. The gross non-performing assets stand at 15.41 percent compared to 15.36 percent in the preceding quarter.

Questions are raised on the particular state of stress on private lender Yes Bank’s corporate NPA (non-performing assets) book ever since the fraud-hit bank’s hurried bail-out by the depository financial institution of India (SBI)-led consortium a year ago. Those questions even now remain largely unanswered.

The numbers on the asset quality within the January-March quarter of 2021 are worrying. If not for the huge loan write-off, the NPA number would are possibly higher. internet NPAs, or NPAs post provisions, jumped to five .88 percent at the top of March 31, compared with 4.04 percent within the December quarter.

High provisions have understandably hurt its earnings. Interest income has fallen. the supply coverage ratio, or the ratio of cash put aside against NPAs, has fallen to 78.6 percent in Q4 from 81.5 percent within the preceding quarter.

What do these numbers mean?

The bank’s survival story continues to be the headache of its deep-pocketed rescuers. Yes Bank has managed to boost funds (it raises Rs 15,000 crore through a follow-on offer) due to the backing of SBI and other promoter banks and it’ll need extra money. “They will need longer and more capital to figure through the asset quality issues,” said a number one banking analyst in Mumbai. The analyst declined to be named saying he has stopped covering the bank. As this analyst said, it’ll require tons more capital to hide its stress. Early this year, the bank got shareholders’ nod to boost Rs 10,000 crore capital. Massive write-offs mean an honest chunk of the capital will choose provisions.

Looking at the segmental NPA breakup corporate loans still, dominate 90 percent of the entire NPAs (Rs 25,946 crore out of Rs 28,610 crore) followed by retail (Rs 1,489 crore) and SME (Rs 784 crore). In line with Supreme Court Judgement and RBI Circular dated April 7, 2021, the bank has classified borrowers as per the extant IRAC norms, pursuant to which the gross slippages stood at Rs 11,873 crore in Q4.

Provisions and contingencies for Q4, FY21 came in at Rs 5,239.6 crore, up 7.5 percent as compared to the year-ago quarter. On a sequential basis, the figures witnessed a huge jump of 138.3 percent to Rs 5,239 crore from Rs 2,198 crore. Net interest income, the difference between interest earned and interest expended, plunged 22.5 percent to Rs 986.7 crore during the quarter under review as compared to Rs 1,273.70 crore within the year-ago quarter.

Advances for the quarter at Rs 1.66 lakh crore declined 2.7 percent year-on-year (YoY), with net interest margin falling 30 bps YoY (down 180 bps QoQ) to 1.6 percent in Q4FY21, Deposits grew significantly by 54.7 percent YoY to Rs 1.62 lakh crore during the quarter ended March 2021. The bank’s retail loan book towards the entire, which stood at 28 percent in December 2020 has improved to 30 percent at the top of the March quarter.

Except for improvement in deposits (which indicates some return of depositor confidence) and a few loan segments, there’s nothing really to cheer about in Yes Bank’s Q4 numbers.

 

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