BackYes Bank posts record ₹18,564-cr loss in December quarter
The share of the gross NPAs in the overall loans bloated to 18.87% as against 7.39% in the preceding quarter, while the capital buffers also plummetedThe overall provisions of ₹24,765 crore hurt the profitability
PremiumMumbai: Crisis-hit Yes bank on Saturday reported a record loss of ₹18,564 crore in the quarter ending 31 December, 2019 owing to a sharp jump in bad loans and higher provisioning.
The bank, which has been put under moratorium by the government, had reported a profit of ₹1001.8 crore during the corresponding period last year and loss of ₹629 crore at the end of 30 September, 2019.
Yes Bank’s gross non-performing assets in absolute terms jumped near eight fold to ₹40,709 crore at the end of December 2019. This includes additional loans worth ₹5,150 crore, which was classified as NPA between 1 January to 14 March. The bank had reported GNPA worth ₹17,134 crore at the end of September 2019.
GNPA as a percentage of total loans soared to 18.87% at the end of December 2019 from 7.39% at the end of September 2019. Net NPA as a percentage of total loans stood at 5.97% as on 31 December 2019 compared to 4.35% at the end of September quarter.
Overall provisions worth ₹24,765 crore at the end of December led to a sharp fall in profitability. Capital adequacy ratio fell to 4.1%, which is nearly a fourth of 16.3% reported at the end of September quarter.
The Common Equity (CET 1) ratio or the core equity capital of the bank stood at 0.60% as on 31 December, 2019 as compared to the regulatory requirement of 7.375%. The CET1 requirement was breached owing to an increase in provision coverage ratio to 72.7% from 43.1% at the end of December 2019. The additional provisions amount to ₹15,422 crore at the end of December 2019.
“The capital infusion and consideration of the AT 1 bonds is expected to improve the CET 1 ratio of the Bank and enable it to meet the minimum requirements of the RBI. In the opinion of the Bank, based on the financial projections prepared by the Bank and approved by the Administrator for the next two years, the proposed capital infusion, lines of liquidity provided by RBI and the reconstruction Scheme, the Bank will be able to realize its assets (including its deferred tax asset) and discharge its liabilities in its normal course of business and hence the financial results have been prepared on a going concern basis," said the bank in its notes to account.
On 13 March, the government approved a rescue plan for Yes bank backed by State bank of India. Under the plan, domestic investors including SBI, HDFC Ltd, ICICI bank Ltd, Kotak Mahindra Bank Ltd, Bandhan Bank Ltd, Federal bank Ltd and IDFC First bank have committed to invest ₹11,200 crore into the bank. According to the scheme, Prashant Kumar will be Yes Bank’s new managing director and chief executive officer for three years. While the RBI’s proposed draft plan had mentioned writing down of additional tier 1 bonds worth ₹8695 crore, the final scheme issued by the government does not contain any reference to writing down the bonds, casting “significant doubt" on the bank’s ability to continue as going concern, the bank’s auditor BSR & Co LLP noted.
Yes bank also noted that, “The assumption of going concern is dependent upon the degree of success of the final reconstruction Scheme, the quantum of capital infused into the Bank and the Bank's ability to stabilise its deposit balances post withdrawal of moratorium by RBI." That said, the bank’s deposit base has shrunk to ₹1.37 lakh crore from ₹1.65 lakh crore as at December 2019.
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