Yes Bank posts loss of Rs 600 crore in Q2, know what hit the lender

Private lender Yes Bank reported a net loss of Rs 600 crore for the quarter ended September 2019 on the back of a one-time deferred tax adjustment of Rs 709 that the bank took to avail of the lower tax rate announced by the government. The net profit would have been Rs 109 crore had the one-time tax adjustment not happened.

The bank had reported a profit of Rs 964.70 crore a year ago. “The profit before tax in Q2 stood at Rs 122.19 crore against Rs 1,426.46 crore y-o-y. PAT impacted by a one-time DTA adjustment of around `709 crore, excluding this one-time impact, adjusted PAT at `109 crore,” the bank said.

The bank’s management mentioned in a call with analysts that the board would evaluate the binding offer of $1.2 billion it had received in November. The bank said it had time till November 30 to decide on the binding offer.

Net interest income declined 9.6% y-o-y to Rs 2,185.91 crore, which was largely due to Rs 228-crore fresh slippages during the quarter. Net interest margin declined to 2.7% compared to 2.8% a quarter ago. The bank’s loss would have been wider had its provision coverage ratio (PCR) been higher. Its PCR declined to 43.1% from 47.8% a year ago. Sequentially, the bank’s PCR remained the same.

The asset quality deteriorated further with gross non-performing assets shooting up to 7.39% from 5.01% in the June quarter. Net NPA as a percentage of net advances increased to 4.35% compared to 2.9% in the June quarter. Gross slippages remained elevated at Rs 5,945 crore against Rs 6,232 crore in April-June. CASA ratio improved to 30.8% in Q2FY20 against 30.2% in Q1FY20. Yes Bank said it had cut exposure to NBFCs, HFCs by Rs 1,750 crore and also reduced exposure to power companies by Rs 2,300 crore in July-September.

The bank did not name the investor that has made a binding offer of $1.2 billion to acquire a stake in the bank. The management mentioned in the conference call with analysts that the board had discussed the binding offer made by an investor on November 1, 2019, however, no final decision was taken on the same.

Yes Bank would take a decision on the binding offer this month. The bank said it had time till November 30 to decide on the binding offer.

Ravneet Gill, CEO of Yes Bank, responded to the questions on stake sale by saying, “The investor has the backing of a large long standing US investor. We have also received bids from 8 domestic and international investors. This includes two of India’s best family offices and 2 Indian enterpreneurs. The total investment in these 8 proposals adds up to $1.5 billion.”