Bad loans take the wind out of Yes Bank— swings to a loss in the second quarter

A watchman steps out of a Yes Bank branch in Mumbai, India, September 21, 2018. REUTERS/Francis Mascarenhas
  • The Mumbai-based bank posted a loss of ₹600 crore for the three months ended September 2019.
  • Yes Bank's share price has lost over 60% of its since the start of this year due to mounting cash crunch and the investors' anxiety with bank's earlier management.
  • Gross NPA, a measure of bad loans, spiked to 7.39% in the latest quarter, more than double compared to the first three months of 2019.
The Mumbai-based Yes Bank posted a shocking loss of ₹600 crore for the three months ended September 2019. While the revenue fell 20%, costs rose during the quarter squeezing the operating profit by 40%.

This is largely due to a sharp spike in bad loans. Gross NPA, a measure of bad loans, jumped to 7.39%— more than doubled compared to the level at the which the number was in the first three months of 2019. Gross NPA rose to ₹17,100 crore— nearly two and a half times more compared to three months ago.

The amount of loans that turned sour during the quarter was over ₹5,945 crore. Making matters worse, Yes Bank had to take a one-time tax hit of ₹709 crore.


In the last quarter ending June 2019, Yes Bank posted as much as ₹114 crore in net profit, 91% less compared to the same period a year earlier. However, it was way better than street predictions that it would post heavy losses.


“This was a ‘Quarter of Consolidation’ in which the bank has demonstrated strong resilience in revenues and asset quality. We believe that earnings trajectory should strengthen significantly from hereon,” the bank said in a press release three months ago.


The brokerages have also been worried ever since the stock has been taking a beating since March this year. Over 60% of the bank’s share value has been shaved off since the start of this year. The stock of yes Bank even hit a ten-year low a few days ago, but since then it has doubled.


Hope floats that there will be a white knight who will bring in the money to help the bank to tide over the current cash crunch.

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“YES Bank’s exposure in Anil Dhirubhai Ambani Group stands at around 2.9% of loan book as per recent Ministry of Corporate Affairs (MCA) filings. Apart from this, the bank’s exposure to the DHFL, Indiabulls and Essel groups combined exceeds around 4% of gross loan book,” said a report by Elara Securities on June 26.

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