Yes Bank’s Loss Exceeds Estimates as Bad Loans Rise
Yes Bank’s Quarterly Loss Exceeds Estimates as Bad Loans Weigh
(Bloomberg) -- Yes Bank Ltd., the Indian lender that’s been courting investors following management turmoil and scrutiny of bad loans, posted a bigger-than-expected second-quarter loss as soured debt increased and the firm took a one-time charge.
The loss totaled 6 billion rupees ($84.7 million) for the three months ended Sept. 30, compared with net income of 9.65 billion rupees a year earlier. Analysts expected a loss of 4 billion rupees, according to the average estimate compiled by Bloomberg.
The results come a day after the bank announced a binding offer from an unidentified global investor to inject $1.2 billion through a share sale. Chief Executive Officer Ravneet Gill has been trying to raise capital as concerns mounted over the bank’s exposure to the troubled shadow-banking sector.
“The slippages have been on the higher side but have been adequately provided,” said Siddharth Purohit, an analyst at SMC Global Securities. “We will now need to see whether there is any further addition to their watchlist of stressed loans and the timeline of capital infusion.”
The bank’s gross bad-loan ratio rose to 7.4% from 5% at the end of June, the results showed.
Yes Bank’s loan slippages -- new delinquent debt -- were at 59.50 billion rupees in the three months to September, lower than 62.3 billion rupees in the June quarter. The bank also took a one-time tax hit of 7.1 billion rupees because of a change in corporate tax rates.
Some of the other highlights include:
- Yes reported a core equity capital of 8.7%
- Loan book reduced by 6.7% to lower risk
- Bank is cutting exposure to non-bank finance companies and real estate sector, said Chief Risk Officer Ashish Agarwal on a conference call with analysts
- Share of retail loans rose to 20% from 14% a year ago
- The bank’s exposure to junk rated companies rose to 314 billion rupees from 295 billion rupees in the June quarter
Shares of Yes Bank fell 5.4% to 66.6 rupees in Mumbai on Friday, extending this year’s decline to 63%. The stock jumped 24% the previous day following the announcement of the investment.
Yes Bank’s 3.75% USD notes due February 2023 fell 0.2 cents on the dollar, the most in over a week, to 89.2 cents as of 8:18 p.m. in Hong Kong, according to prices compiled by Bloomberg.
Gill joined the firm in March after co-founder Rana Kapoor stepped down following a dispute with the central bank over the lender’s reporting of bad debts.
To contact the reporter on this story: Suvashree Ghosh in Mumbai at sghosh186@bloomberg.net
To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Russell Ward, Arijit Ghosh
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