Mumbai: Private lender YES Bank has fallen down 3 notches to 10th position, in terms of market valuation, for the first time. It shares slumped over 30% in the last two sessions after the bank reported a surprise net loss in its March quarter earnings.
YES Bank has slipped below market valuation of state-run lenders like Bank of Baroda and Punjab National Bank.
HDFC Bank Ltd is the most valued Indian bank with a market cap of Rupees 6.45 trillion, which is followed by State Bank of India and Kotak Mahindra Bank with market cap of Rupees 2.76 trillion and Rupees 2.71 trillion, respectively.
Shares of YES Bank were down 3.38% at Rs.170 at 11:58 AM on Monday as rating agency ICRA downgraded its long-term ratings on the bank along with a negative outlook. It’s market capitalization stood at Rs.39,673 crore.
Ratings agency ICRA downgraded Yes Bank’s Tier 2, lower Tier 2, infrastructure bonds to AA- from AA, and cut upper Tier 2, Tier 1 notes to A+ from AA-, in view of an increase in its lower-rated advances. ICRA also cited further weakening in the bank’s capital buffers following voluntary provisions and losses in the fourth quarter of the fiscal year 2019.
In the previous week, YES Bank reported a net loss of Rupees 1,500 crore for Jan-Mar, led by elevated credit cost and a steep decline in non-interest income. The bank also reported a new stress book.
“New management will aim for full blown kitchen sinking along with the realignment of its business towards more granular business with a focus on retail segment. A shift in accounting policies for recognition of fee income will take a toll on medium-term earnings. Indicated stressed book will keep credit cost higher. Also, its immediate need on raising capital will be an overhang on the stock”, a note by IDBI Capital said.
