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MD & CEO Prashant Kumar

MUMBAI :

Yes bank will have zero non-performing assets after it transfers its entire bad loan book to the asset reconstruction company by the end of March 2022, according to managing director and chief executive officer Prashant Kumar. Announcing the second quarter earnings, Kumar said the private sector lender will transfer all bad loans in the retail, corporate, and MSME books to the newly established ARC.

Yes Bank is currently in the process of talking to investors who have showed interest for the ARC and expects to complete the process in 60 days, Kumar added. Nearly 12 investors have expressed interest for setting up the ARC with Yes bank as the minority partner. This includes Brookfield Asset Management, Ares SSG, Oaktree Capital Management, JC Flower, Varde Partners, CarVal Investors, Avenue Asia Group, Bain Capital’s India Resurgent Fund, Apollo Global Management, Rohatyn Group and Silver Point Capital.

The second quarter earnings showed Yes bank reporting a 74% increase in net profit year-on-year (y-o-y) to ₹22,550 crore at the end of September, owing to lower provisions. The bank had reported net profit of ₹12,937 crore a year earlier. Net interest income fell 23% y-o-y to ₹1512 crore compared with ₹1,973 crore a year ago

The bank’s loan book showed signs of increased stress in the second quarter owing to higher restructuring of MSME loans and also on account of covid 2.0. The restructured book expanded by 24% to ₹6,184 crore compared to ₹4,976 crore in the previous quarter. That said, asset quality improved marginally, with gross non-performing assets at ₹28,741 crore at the end of September compared with ₹28,506 crore in the previous quarter. As a percentage of total assets, GNPA stood lower at 14.97% at the end of second quarter compared with 15.6% in the previous quarter. Fresh slippages fell sequentially to ₹1,783 crore of which corporate slippages stood at ₹750 crore at the end of September quarter compared to ₹1,258 crore last quarter.

“If we see the movement of NPA, addition of bad loans in the retail and MSME sector stood at ₹1,000 crore. We do not expect more than ₹600 crore of NPA from these segments in the coming quarter,” Kumar added.

Provisioning therefore fell to ₹377.37 crore at the end of September quarter compared to ₹457.03 crore in the previous quarter. The bank also made prudent provisioning of ₹336 crore on a single telecom exposure in the quarter.

Yes bank’s loan book showed a tepid growth of 4% y-o-y to ₹1.72 trillion, with retail book growing at 29%. Deposits on the other hand grew 30% y-o-y to ₹1.76 trillion. The management expects a 15% credit growth for the current fiscal year.

Kumar also added that the bank is looking at significant accretion on capital from better recovery. The bank is therefore looking at capital raising only by the first quarter of next fiscal year.

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