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Yes Bank is building deposits, but loans are another matter

Yes Bank's loan book is still ravaged with bad assets, an outcome of bad decisions by the former management. More than 15% of its loan portfolio is bad as of March and the pandemic has made it more difficult to repair the balance sheet. (MINT_PRINT)Premium
Yes Bank's loan book is still ravaged with bad assets, an outcome of bad decisions by the former management. More than 15% of its loan portfolio is bad as of March and the pandemic has made it more difficult to repair the balance sheet. (MINT_PRINT)

  • Yes Bank reported 54% year-on-year growth in its deposits for the March quarter
  • Low cost current and savings account deposits remain a sour spot, with these being just a quarter of the total deposit base

MUMBAI : One year since its precipitous fall to the bottom, Yes Bank has managed to build back its depositors’ trust. But there is a long time before the private sector lender regains a large part of its lost health and the pandemic won’t make this easy either.

Yes Bank reported 54% year-on-year growth in its deposits for the March quarter. Of course, a large part of this growth was because of a low base.

Recall that the lender has been losing deposits hand over fist, which along with depleted capital, led to a near collapse in early 2020.

The erosion has been stemmed for now and in FY21, the bank’s retail deposits grew 33%, and corporate deposits grew 60%. But the good news ends for Yes Bank here.

Satish Kumar/Mint
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Satish Kumar/Mint


Low-cost current and savings account deposits remain a sour spot. Also, its loan book is still ravaged with bad assets, an outcome of bad decisions by the former management. More than 15% of its loan portfolio is bad as of March and the pandemic has made it more difficult to repair the balance sheet.

Its entire operating profit for FY21 has gone into plugging the holes left behind by defaulters. Notwithstanding forbearance, slippages have only increased for the lender.

Clearly, the pandemic has dealt a blow to an already weak balance sheet. The quarterly net loss in this context should not come as a surprise.

The outlook for asset quality is not good owing to the second wave of covid infections.

Granted, the defaults will not be as bad as last year, but there will still be large defaults. Further, we should note that forbearances this year may not add up to last year’s level.

In such a situation, the desire to opt for the inorganic route for growth should raise some concerns.

Yes Bank’s managing director Prashant Kumar has indicated that the lender would look at acquiring Citigroup’s retail business in India, which the latter will exit.

A 17% capital adequacy ratio may seem enough to indulge in some shopping. But when the house fire has not been doused completely, looking to add new rooms may be a tad too brave.

Yes Bank is being rebuilt, one deposit at a time. For loans, too, it is better that the lender goes slow.

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