Auditors ‘qualify’ Yes Bank 2019-20 accounts

Bank reports Rs3668 cr Q4 loss sans one-off gain

MUMBAI: The auditors of Yes Bank ‘qualified’ the bank’s financials for 2019-20 as the bank has breached the regulatory requirements on Tier 1 capital and also on account of the uncertainty with regard to the consequential impact of certain transactions of the former managing director of the bank.

Auditors opt to qualify accounts of a company when they develop doubts or disagree with certain aspects of the accounts of that entity.

The once glorious Yes Bank reported a net loss of Rs3,668 crore for the quarter ended March 31, 2020. However, on a one-off gain, the bank closed the quarter with a net profit of Rs2,629 crore, compared with a loss of Rs1,507 crore for the same period last year.
The net interest income for the quarter was Rs1,274 crore, against Rs2,505.9 crore the bank made for the same period last year. Deposits fell by Rs1.22 lakh crore between March 2019 and March 2020 due to the untoward developments the bank witnessed in the past more than a year.

“The bank has breached the regulatory requirements of RBI regarding maintaining the minimum Common Equity Tier 1 (CET 1) and Tier I capital ratios. The breach is primarily on account of the increase in the provision for advances to enhance its Provision Coverage Ratio (PCR) on its NPAs over and above the minimum RBI requirement,” the auditors explained their basis for making the Qualified Opinion.

The CET 1 ratio and the Tier 1 capital ratio for the Yes Bank as of March 31, 2020 stood at 6.3 per cent and 6.5 per cent as compared with the minimum requirements of 7.375 per cent and 8.875 per cent respectively.

“This implies that the bank will have to take effective steps to augment its capital base in the year 2020-21. Further, in view of the RBI norms relating to the breach of the aforesaid ratio, there is uncertainty around RBI’s potential action for such a breach,” the auditors added.

Referring to the former MD’s controversial transactions, the auditors said that the enquiries and investigations are still on-going.

“In view of those facts, we are unable to comment on the consequential impact of the said matter on the standalone financial results (of Yes Bank),” the auditors further noted.

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