Provisions for bad loans and contingencies rose to  ₹1,336.25 crore as against  ₹942.53 crore in year-ago period (Photo: Reuters)
Provisions for bad loans and contingencies rose to 1,336.25 crore as against 942.53 crore in year-ago period (Photo: Reuters)

Yes Bank Q2 loss at 600 crore on deferred tax asset adjustment

  • The bank’s loss was higher than the 402 crore estimated in a Bloomberg consensus of 17 analysts
  • The results were hurt by a one-time deferred tax asset adjustment of 709 crore related to the bank's shift to country's new corporate tax structure

Mumbai: Private sector lender Yes Bank on Friday reported a net loss of 600 crore for the three months to September primarily owing to a one-time deferred-tax asset (DTA) adjustment of 709 crore. The bank had posted a net profit of 965 crore in the same period last year.

“The bank has elected to exercise the option permitted under section 115BAA of the Income Tax Act, 1961 as introduced by the Taxation Laws (Amendment) Ordinance, 2019. Accordingly, the bank has recognized provision for Income Tax for quarter and half year ended 30 September, 2019 and re-measured its deferred tax assets...," it said in notes accompanying the financial result.

The bank’s loss was higher than 402 crore estimated by a Bloomberg consensus estimate of 17 analysts. Even without DTA adjustment, the bank’s operating performance was weaker than the same period last year. Yes Bank’s operating profit was also down 38% year-on-year (y-o-y) to 1,458 crore in the quarter under review. On Thursday, Yes Bank said it has received a $1.2 billion (about 8,520 crore) binding offer for a stake purchase from a global investor.

Its net interest income (NII) – difference between interest earned and interest expended – was down 9.6% y-o-y to 2,186 crore. The bank’s net interest margin (NIM), a key measure of its profitability, stood at 2.7%, down 60 basis points (bps) y-o-y and 10 bps sequentially.

Yes Bank reported a 42% rise in provisions in the September quarter to 1,336.25 crore. Therefore, even on a pre-tax level (after provisions), the bank’s profit in Q2FY20 stood at 122 crore, down 91% y-o-y.

The private sector lender’s asset quality deteriorated in the September quarter of FY20 as its gross bad loan ratio or bad loans as a percentage of advances rose 579 bps y-o-y and 238 bps sequentially. Its total capital adequacy ratio under Basel III norms rose 10 bps y-o-y and 70 bps sequentially to 16.3%. Yes Bank said the gross non-performing assets (GNPAs) for Q2 FY20 jumped to 7.39 per cent from 5.01 per cent in Q1 FY20 and 1.6 per cent in Q2 FY19.

The gross NPAs increased to 17,134 crore in the quarter ended September from 3,866 crore in the year-ago period. Net NPAs moved up to 9,757 crore from 2,019 crore in the same period.

The percentage of net NPAs jumped from 0.84 per cent in Q2 FY19 to 4.35 per cent in Q2 FY20. The bank made provisions of 1,336 crore for the quarter.

Its gross slippages in the September quarter stood at 5,945 crore and recoveries and upgrades aggregated to 867 crore. The bank’s total outstanding advances were at 2.24 trillion in the quarter under review, down 6.3% y-o-y and 5% sequentially. The bank also saw a decline in its total deposits by 6% y-o-y to 2.09 trillion.

Yes Bank said in a press release on Friday that it has seen material reduction in gross outstanding exposures of 2,300 crore to electricity companies, and 1,750 crore to non-banking financial companies and housing finance companies.

Meanwhile, the bank said that during the quarter and the half year ended 30 September, 2019, the bank has received fresh anonymous whistleblower complaints alleging irregularities in the bank's operations. It said it is continuing to analyze these and will consider the implications of ongoing work once the examination is completed.

About the allegations leveled by a whistleblower last year, Yes Bank said that the audit Committee of the Bank had engaged an external firm to independently examine the matter.

“During the quarter, the bank has received the report from the external firm and is currently in the process of evaluating if any of the findings have material impact on financial statements/processes. Based on work done and findings till date, the Bank has not identified any material financial statement implications," it said in the notes.

On Friday, the private lender's stock on BSE closed 6% lower at 66.10.