Customers exit a Yes Bank Ltd. branch in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Q4 Results: Yes Bank Reports Rs 1,506-Crore Loss As Bad Loans, Provisions Surge

Yes Bank Ltd. reported an unexpected loss in the first earnings released under new Chief Executive Officer Ravneet Gill as bad loans and provisions surged.

The private lender’s loss stood at Rs 1,506 crore in the quarter ended March, according to its exchange filing. Analysts tracked by Bloomberg expected a profit of Rs 1,024 crore. The bank had reported a profit of Rs 1,001 crore in the previous quarter.

Only 30 percent of our 1,100 branches are profitable. 
Ravneet Gill, Chief Executive Officer, Yes Bank

Gill said the bank envisions that by 2025, all branches should be profitable.

Net interest income was up 16 percent to Rs 2,506 crore in the fourth quarter. Analysts had projected Rs 2,708 crore. Net interest margin for the quarter stood at 3.1 percent and at 3.2 percent for the full financial year.

“The net interest income in the fourth quarter has a Rs 1 billion (Rs 100 crore) one-off impact due to interest reversals on rise in non-performing assets,” bank’s group President Rajat Monga said in an analyst call post the earnings announcement.

Asset Quality

Gross non-performing assets rose to 3.22 percent of the total advances from 2.1 percent in the previous quarter. Net NPA ratio expanded to 1.86 percent from 1.18 percent.

In absolute terms, Yes Bank reported gross bad loans of Rs 7,882 crore in the fourth quarter compared to Rs 5,158 crore. Yes Bank has outstanding loans worth Rs 2,528 crore to various entities of the IL&FS Group. Of this, it has classified loans worth Rs 2,442 crore as non-performing assets.

The bank reported gross slippages of Rs 3,481 crore in the quarter. Of which, Rs 552 crore was on account of exposure to Jet Airways, Monga said.

The slippages include Rs 529-crore exposure to a “stressed infrastructure conglomerate,” the bank said in the filing without disclosing the name of the asset.

The Mumbai-based lender also stepped up provisions significantly. In the fourth quarter, provisions of Rs 3,662 crore were set aside compared to Rs 550 crore in the previous quarter.

The lender has also created a contingency provision of Rs 2,100 crore. “We took contingency provisioning against accounts in the below investment grade loan pool,” Monga said, adding this provision covers 20 percent of the total loan amount in these accounts.

Monga said the bank expects about half of its loans in the below investment grade pool to go bad. But the 20 percent provision cover against these loans made should be adequate to cover any losses for now, he said.

Yes Bank also aims to raise its provision coverage ratio to 60 percent in 12-18 months, Monga said. The private sector lender’s provision coverage ratio stood at 43.1 percent as on March 31.

The bank reported a credit cost of 137 basis points in the fourth quarter and 209 basis points for the full financial year. Credit costs, according to Gill, could come down to 125 basis points in the ongoing fiscal and could start moderating further in the next year.

Also, the fees from the bank’s corporate banking business had come down considerably due to bad loan related issues, Monga said.

The bank has reduced loan outstanding under the large exposure framework, which hit the corporate fee. Yes Bank aims to grow its working capital loans in the current financial year, focusing on recurring corporate fees, rather than large one-time benefits, Monga said.

Q4 Results: Yes Bank Reports Rs 1,506-Crore Loss As Bad Loans, Provisions Surge