Huge provisioning lands Yes Bank in record Rs18,560 cr Q3 loss

Provision coverage ratio improves to 72.7 pc

MUMBAI: As if in a move to clean up the bad loan clog once and for all, Yes Bank, the ‘bank-in-trouble’, has raised its provisions against non-performing assets (NPAs) substantially to Rs24,766 crore during the quarter ending December 31, 2019 from just Rs550 crore a year ago and thus landing the bank in a record quarterly net loss of Rs18,560 crore compared with a net profit of Rs1002 crore a year ago.

Yes Bank is going through a reconstruction exercise with the support of Reserve Bank of India (RBI) and with the blessings of the Central Government. The huge provisioning against bad loans has increased the bank’s provision coverage ratio (PCR) substantially from 43.1 per cent to 72.7 per cent sequentially, despite elevated slippages during the quarter under review.

Apart from country’s largest bank, SBI, several other banks also have come forward to participate in the capital build-up of the bank. Yes Bank has given a slippage guidance of up to 5 per cent for FY21 and normalization thereafter, which is a promising sign according to industry experts.

As of now, the picture may not be looking good as the bank sits on a gross NPA of Rs40,709 crore (18.87 per cent) though the net NPA has declined substantially to Rs11,115 crore or 5.97 per cent, but still high.

Net interest margin (NIM) during the quarter was at 1.4 per cent. The non-interest income for Q3FY20 was at Rs626 crore after declining 30 per cent during the quarter.

Deposits during the quarter declined 26 per cent year on year to Rs1.66 lakh crore, whereas net advances at Rs1.86 lakh crore declined 24 per cent during the said period and 17 per cent on sequential basis.

The bank witnessed significant erosion in its capital with common equity tier 1 or the CET ratio plunging to unsustainable 0.6 per cent against a regulatory minimum requirement of 7.38 per cent.

The bank has reported capital adequacy ratio (CAR) at 4.2 per cent, against 16.4 per cent a year ago and 16.3 per cent towards the end of September quarter.

 

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