Why YES Bank’s NPAs rose 4-fold in a year; CEO Ravneet Gill tells reasons behind rising slippages

For the three months to September in FY20, a sharp increase in bad loans, higher provisions and one-time deferred tax assets (DTA) dented YES Bank’s earnings.

YES Bank’s MD & CEO Ravneet Gill said that unfortunate circumstances that were difficult to anticipate including crisis at Cox & Kings, CG Power, and CCD led to a rise in slippages for the private lender in Q2FY20, CNBC TV-18 reported. These troubled firms were not victims of the ongoing economic slowdown but financial trouble brewing in these firms, he said. Adding, he said that such events had a negative impact on a company’s credit profile in the second quarter of the ongoing fiscal. Such incidents are difficult to anticipate, Ravneet Gill noted.

For the three months to September in FY20, a sharp increase in bad loans, higher provisions and one-time deferred tax assets (DTA) dented YES Bank’s earnings, leading to a net loss of Rs 600 crore. While DTA adjustment was worth Rs 709 crore, provisions rose to Rs 1,336 crore in the quarter under review.

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NPA rise

Gross non-performing assets (NPAs) saw a huge surge, jumping over four-fold to Rs 17,134 crore as against Rs 3,866 crore in the corresponding period of the previous year. NPA percentage soared from 0.84 per cent in Q2 FY19 to 4.35 per cent in Q2FY20.   Taking stock of matter, investment advisor Sandip Sabharwal tweeted: “Disastrous asset quality trends in @YESBANK The previous management was hiding NPAs like crazy.@RBI should take action against them.”

Binding offer

On the binding offer worth $1.2 billion that YES Bank received last week, Ravneet Gill said that it was backed by a “large US financial institution.” “The bank should be able to announce details of binding bid in a few days,” he also told CNBC TV-18.

Rana Kapoor’s share sale

On Rana Kapoor’s recent share sale, Ravneet Gill said that the shares were completely bought by retail shareholders. There is no warehousing in Rana Kapoor’s share sale, he added. On October 1, 2019, the promoters told stock exchanges that they have sold another 2.16 per cent stake in the bank. YES Capital (India), Morgan Credits Private and Rana Kapoor together sold 552 lakh shares or 2.16 per cent stake in the open market during September 26-27.