Yes Bank's share price slips 5% ahead of earnings as COVID-19 uncertainty continues to loom after scam

Yes Bank to announced its fourth quarter earnings tomorrow, May 6BCCL


  • Yes Bank's share price dipped by 5% in the morning today, May 6, ahead of its earnings announced scheduled during after market hours.
  • The troubled private sector bank posted a net loss of ₹18,564 crore in the last quarter as it wiped dirty money from its balance sheet.
  • Analysts believe that this quarter’s earnings hold more hope but a lot depends on whether or the bank’s borrowers opted for the 3-month moratorium on loan repayments floated by the Reserve Bank of India (RBI).
Yes Bank's shares dipped by nearly 5% ahead of its earnings announcement later today, May 6. But that’s barely a move for the banks’ investors who have lost a total of 26.8% this year so far, nearly saw the bank fail until State Bank of India (SBI) and some peers came to its rescue.

If anything, the stock has recovered during the COVID-19 lockdown as the fears around its survival eased. Investors hope that despite the lockdown and the moratorium on loans the Jan-March quarter will be better than the preceding three months where the bank seemed to be going under.

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Yes Bank's share price over the last three monthsBSE/Flourish/BI India

To fix the surge of sub-standard loans in the bank’s kitty, the Reserve Bank of India (RBI) placed a one-month moratorium which capped all withdrawals from Yes Bank at ₹50,000, which came into effect on March 5. This tanked the share price by over 56% overnight.

When the moratorium was eventually lifted on March 18, the stock surged back up — hitting ₹60.80. But the quarterly numbers will reflect the mess that was created within the bank and later cleaned up.

However, it may be too soon to say what the ultimate outcome will be given whether or not the bank’s retail borrowers have taken up the Reserve Bank of India’s (RBI) offer on the 3-month moratorium to pay off loans.
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Last quarter, the troubled private sector lender Yes Bank posted a record-high loss of ₹18,564 crore for the quarter ended December on the back of a steep rise in bad loans. Coming out of two straight quarters of losses, investors would hope the incremental risk for Yes Bank may be lesser this time.

Yes Bank's net profit and loss over the last five quartersYes Bank earnings reports/Flourish/BI India

The lockdown, which came into force March 25, has exacerbated the risks for banks that were already saddled by bad debts. But the trend seems to vary from one bank to another.

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At IndusInd Bank, for instance, more than 90% of the borrowers across vertices chose to make their repayments. Whereas Axis Bank posted an unexpected loss as the provision for future bad loans spiked, which means the bank expects more borrowers to be unable to repay their debt. In the case of home loan provider, CanFin Homes, 50% of borrowers sought to delay their monthly instalments.

So, what happens to the Yes Bank share price tomorrow will depend on a lot of factors outside the bank even if all the hidden dirt within the company has been exposed.

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