Care puts some Yes Bank debt instruments on ‘credit watch with developing implications’
Yes Bank clarified that the bank’s asset quality continues to be stable and that gross bad loan ratio fell 47 bps year-on-year.
Mumbai: Care Ratings has put certain debt instruments of Yes Bank under watch, the bank said on Monday as it published its unaudited second quarter results. The rating was influenced by the Reserve Bank of India’s (RBI’s) decision to cut short the tenure of the bank’s managing director and chief executive Rana Kapoor to 31 January 2019.
“The Senior and Tier-II instruments issued by the Bank, which were upgraded to Care AAA with Stable Outlook from Care AA+ on 5 July 2018, now carry a rating of Care AAA (credit watch with developing implications),” Yes Bank said in a press release.
The rating agency’s action coincides with the release of a part of the unaudited financial statement for second quarter of FY19 by the bank.
In a statement to the stock exchanges on Monday, Yes Bank clarified that its asset quality continues to be stable and that gross bad loan ratio fell 47 basis points (bps) year-on-year (y-o-y) to 1.35%.
Gross bad loan ratio is total non-performing assets (NPAs) as a percentage of gross advances.
Following the announcement, shares of Yes Bank rose, closing at ₹201.2 on the BSE, up 9.68% from its previous close
The bank said while deposits grew 41% y-o-y to ₹2.23 trillion, loans and advances grew 61.5% y-o-y to ₹2.4 trillion in the September quarter of FY19. It added that its domestic loans saw a 56.4% y-o-y growth in the same period.
Releasing this data on financial performance ahead of the official announcement for the September quarter, it said the numbers were subject to approval by the audit committee of the board and review by the statutory auditors of the bank.
On succession planning, the bank said the two external experts of its ‘search and selection committee’ would be finalized by 7 October.
The committee, it said, will be assisted by a global leadership advisory firm that will evaluate both internal and external candidates and make suitable recommendations to the board of directors for submission to the Reserve Bank of India.
The lender also said it has sought RBI’s approval for appointing two senior bankers—Rajat Monga and Pralay Mondal—as executive directors.
On 25 September, the board of Yes Bank had said it would ask RBI to extend Kapoor’s tenure by eight months.
The board decided it would first seek an extension for Kapoor till 30 April 2019 for finalization of financial statements for the year to 31 March, and thereafter a further extension till 30 September for completing the annual general meeting process.
The bank’s board decided on the course of action after RBI agreed to extend Kapoor’s tenure till 31 January 2019 in response to the bank’s request for a three-year extension till 31 August 2021.
Madhu Kapur, widow of co-founder Ashok Kapur and the bank’s second largest shareholder, has written to the board saying Yes Bank’s decision to request the regulator to extend Rana Kapoor’s tenure was not in the best interests of the lender, Mint reported on 1 October.
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