Yes Bank Staying Away From Lending To Covid-Hit Sectors This Fiscal, Says CEO Kumar

Yes Bank Ltd. will stay away from lending to sectors most impacted by Covid and will focus on improving asset quality even as the private lender pushes for higher disbursements.

"There are two or three sectors which for the time being we would not like to go into, like hospitality, tours and travels and real estate,” Prashant Kumar, managing director and chief executive officer at Yes Bank, said in an interview with BloombergQuint. “I am not saying this is for the long term, but at least in the current financial year because these have been seriously impacted by Covid."

Still, disbursements toward good-quality corporate customers will start showing up in the loan growth during the next two quarters, he said. “We have strong relationships with our corporate clients. Even if we give small working capital loans, achieving a 10% growth (target) will not be difficult."

Yes Bank targets a 15% growth for its overall loan book this fiscal, aided by the retail and micro, small and medium enterprises portfolio which the bank expects to grow 20%.

Yes Bank's loan book was flat quarter-on-quarter at Rs 1.63 lakh crore as of June. Retail and MSME loans, accounting for 53% of its book, rose 23% over a year earlier.

In its deposit book, the bank saw a 39% increase year-on-year in the first quarter but it remained flat sequentially at Rs 1.63 lakh crore. Low-cost current and savings account deposits rose 5% sequentially to Rs 44,790 crore, with the CASA ratio improving to 27.4% of total deposits from 26.1% as of March.

"During these difficult times (second Covid wave), we have still managed to add 1.5 lakh new CASA customers, as compared with our usual run rate of 2.5-3 lakh,” Kumar said. “We are having full trust, comfort and backing from our customers."

In March 2020, after the Reserve Bank of India put Yes Bank under a moratorium as part of its rescue plan, depositors wanted to withdraw funds from the bank. The rescue plan saw large lenders such as State Bank of India infusing capital, helping reinstate depositor confidence in Yes Bank.

The bank's asset quality saw a marginal decline with its gross non-performing asset ratio at 15.6% as of June compared with 15.4% as of March. According to Kumar, the bank is seeing higher recoveries and upgrades than fresh slippages, which will help it counter any asset quality concerns stemming from the pandemic.

In April-June, the bank reported fresh slippages worth Rs 2,233 crore compared to upgrades worth Rs 1,723 crore and cash recoveries worth Rs 602 crore.

Yes Bank did not write off any fresh bad loans during the quarter versus a write-off worth Rs 9,700 crore in January-March, according to Kumar.

"We are not going to do any technical write-offs in the future either because we are getting good recoveries from the stressed pool (of assets),” Kumar said. For tax optimisation, too, "you don't get any advantage of a technical write-off beyond a point", he said.

Yes Bank’s restructured pool increased to Rs 4,976 crore, with most additions of about Rs 3,700 crore coming in the first quarter of FY22.

"We are confident on the quality of these assets going forward. The parameters given by the Kamath committee were quite stringent. Anybody going through the parameters will likely survive," Kumar said.

Bad Bank

According to Kumar, the bad bank as a concept is really good for the economy. “But if you are a sole lender to a company, it makes sense to initiate recovery within the bank,” Kumar said. “In case of multiple lenders, it would make more sense to aggregate the loans under one entity."

Yes Bank had tried to create an asset reconstruction company of its own to address the resolution and recovery of bad loans on its book. But the RBI declined approval.

Watch the interview with Yes Bank CEO Prashant Kumar: