Stock Updates | April 24, 2017
The stock market at times skips our heart beats with unpleasant surprises. While Yes Bank was tasting its success with strong traction in loans, healthy deposit growth, and stable margins despite one off huge provisioning, its habitual well-rounded performance got dampened by the sharp rise in Gross Non-performing Assets (GNPAs) during the 4Q FY2017. As a result, on April 20, 2017, the bank witnessed a massive share fall as much as 6.5%. This has been the steepest fall of the bank in five months after it reported a sharp PAT growth of 30% YOY with GNPA almost doubled in absolute term QoQ to Rs. 2019 Cr. In terms of ratio, GNPA increased from 0.85% to 1.52%, whereas NNPA increased from 0.29% to 0.81% on a sequential basis.
Owing to the new rule introduced by the RBI which asks banks to disclose any large divergence between their assessments of the bad loans and the regulators, Yes Bank reported a surge in the quantum of bad loans during 4Q FY2017. While the bank’s non-performing assets were Rs. 1005.9 Cr. in the previous quarter, it raised to Rs. 2,018.56 Cr. in the recent quarter.
A slippage of one account of Yes Bank in Cement Sector also leads to an increase in GNPA. The exposure in this account is Rs. 911 Cr. which is 69 bps of its gross advances. Nonetheless, the RBI directive and management is highly hopeful about this slippage as they anticipate to recovering this account in June Quarter.
Recently, RBI also asked banks to increase the standard assets provisioning on telecom sector as proactive measures which raised concerns on trouble of telecom companies in India. The exposure of Yes Bank in this sector is 4.9% out of which 4.2% is A or above rated. The restructured advances of the bank too decline from 42 bps to 36 bps as there has been no restructuring in 4Q FY2017.
However, the brighter side of the news is, despite the bank had to sell Rs. 887Cr. of assets, the management is hopeful about releasing collateral/security cover against these assets. Standard SDR Advances outstanding at 0.22% to Gross Advances from five accounts of which three accounts got restructured during Q4 FY2017. So, now the total outstanding investments in SDR stand at 0.02% of Advances.