Yes Bank's shares tumble by 20% as profits fall by 91% on higher NPA provisioning

Private lender Yes Bank reported a 91 per cent fall in its profit at Rs 113.76 crore, down from Rs 1,260.36 in the comparable period last year while the percentage of gross NPA also rose nearly fivefold to 5.01 from 1.31 last year.

According to Bloomberg, Yes Bank's shares tumbled by 20%. While the Mumbai-based lender returned to profit in the three months ended June, its provisions for soured debts almost tripled from a year earlier, results showed late Wednesday.

This is the second consecutive quarter the bank has shown a massive hit on the bottom-line since the new management under Ravneet Gill took over in March after the forced exit of promoter-chief executive Rana Kapoor over governance concerns by the RBI. The bank's fresh slippages at Rs 6,232 crore nearly doubled if compared to the Rs 3,408 crore in the previous quarter, leading the gross non-performing assets ratio to rise to 5.01 per cent against 1.31 per cent in the year-ago period and 2.91 per cent three months ago.

The overall provisions galloped 184 per cent to Rs 1,784 crore. It used Rs 1,399 crore of the Rs 2,100 crore in additional provisions made during the March quarter. Downgrade of two finance companies led to a Rs 1,109 crore hit in provisions during the reporting quarter. The provision coverage ratio dropped to 43 per cent, one of the lowest among private sector lenders.

Bloomberg Intelligence analyst Diksha Gera said, Yes Bank will need to issue fresh capital to give it room to boost revenue and profitability. Yes Bank is grappling with a crisis among shadow lenders because of its sizeable exposure to the cash-strapped industry. The issue has complicated new Chief Executive Officer Ravneet Gill’s efforts to clean up the balance sheet after the lender clashed with the Reserve Bank of India last year for not adequately disclosing problem loans, reported the Bloomberg.

On a sequential basis, however, the Bank's June quarter result was better in terms of profit as the last quarter saw the Yes Bank first ever loss to the tune on Rs 1,506.64 crore. The amount that a company sets aside for a known liability or 'provisioning' in banking parlance stood at Rs 1,784.11 crore up from Rs 625.65 crore in the June quarter last year. The company said that 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," Yes Bank said.

(Inputs from Agencies)

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