Yes Bank profits dropped 91%-- but it was still way better than expectations
- Yes Bank’s net profit stood at ₹114 crore for the first quarter of 2019-20, which fell by a massive 94.4% from the same quarter last year, at ₹1,265 crore.
- Its non-performing assets or loans that have turned bad, stood at ₹6,883 crore.
- The bank’s net interest income grew 2.8% y-o-y to ₹2,281 crore during the quarter.
Yes Bank posted as much as ₹114 crore in net profits for the first quarter of 2019-20, beating street predictions that it would post heavy losses. However, its profits fell by a massive 91% from the same quarter last year, at ₹1,265 crore.
In addition, the report has a lot of cause for worry. Its provisions which is the amount a bank sets aside in case a loan goes bad, is at a massive ₹1,785 crore, which ballooned from ₹625 crore in the same quarter last year.
As per the bank’s earnings report, its non-performing assets or loans that have turned bad, stood at ₹6,883 crore. An NPA account with an exposure of ₹411 crore was sold to an asset restructuring company during the quarter, the bank had said.
‘Quarter of Consolidation’
The bank’s net interest income grew 2.8% y-o-y to ₹2,281 crore during the quarter. This is in spite of absorbing an impact of ₹223 crores of interest reversals on account of slippages during the quarter, the bank said.
“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.
In anticipation of possible losses, the bank’s stock closed 5.2% lower in today’s trade, at ₹98.4.
A Kotak Equities had forecasted that Yes Bank will post as much as ₹500 crore in losses. Brokerages believed that this quarter too, like last quarter would end in red, when it had posted a loss of ₹1,508 crore.
The brokerages have also been worried ever since the stock has been taking a beating since March this year. As much as 50% of the bank’s value was shaved off, after the banking regulator insisted that its founder Rana Kapoor step down, over allegations that it has not been making disclosures on its asset quality as per norms.
The quality of the bank’s assets has been a cause for worry to investors and analysts alike.
“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.
Yes Bank’s investors are desperate for a buyer amid fears of a massive quarterly loss