Yes Bank's share price is not celebrating the surprise profit because it has a capital problem

  • Yes Bank’s stock slipped by a massive 11.6% in early trade today, after it beat street expectations and posted profits.
  • Yes Bank posted as much as ₹114 crore in net profits for the first quarter of 2019-20, as compared to ₹1,265 crore in the same quarter last year.
  • The stock had been volatile for the last few days. It slipped 5% yesterday, but went up by 11.4%, the day before.

Yes Bank’s stock slipped by a massive 11.6% in early trade today, even as it beat street expectations and posted profits. Though its net profit dropped by 91%, analysts and brokerages have been expecting it to post massive losses, like it did in the last quarter.

The stock was trading at ₹87.4, at 9:40 am. The stock had been volatile for the last few days. In anticipation of a quarterly loss, it slipped 5% yesterday, but the day before it rallied 11% on rumours that it struck a deal with private equity investors to sell stake, which the bank denied later.

Brokerages however are not rushing into change their stance on the stock. Credit Suisse and J P Morgan maintained their ‘neutral’ rating, while Morgan Stanley maintains an underweight on account on ‘slippages’ during the quarter.


Only CLSA was confident of its performance, on expectations that will be able to raise capital. “Management expects a capital raise in the second quarter, and expect 60% of stressed book to slip; retail push is key,” the brokerage said.


Yesterday, Yes Bank posted as much as ₹114 crore in net profits for the first quarter of 2019-20, as compared to ₹1,265 crore in the same quarter last year. Last quarter which is the fourth quarter of 2018-19, it posted massive losses to the tune of ₹1,508 crore.


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.


Heavy Provisions

The quarterly 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.

The bank management is however confident that it will grow from hereon. “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.



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