Yes Bank Share Analysis

 As on Dec. 31, 2020, total advances stood at Rs 1.69 lakh crore, which included Rs 88,634 crore worth corporate loans, Rs 47,115 crore worth retail loans, Rs 13,448 crore toward medium enterprises and Rs 20,524 crore worth small and micro enterprises.

According to Kumar, the bank is expecting 10% aggregate loan growth in the next financial year, which will largely stem from retail and small and medium enterprises. The bank is also looking at growing its working capital financing business, rather than taking on large-term corporate loan exposures, he said.

During the October-December quarter, the bank disbursed Rs 12,000 crore in retail and small business loans and about Rs 2,000 crore in corporate credit.

Even the cheque bounce rate has dropped from 18% to 9%,” Kumar said.

Macquarie Research estimated the bank’s net overdue loans at Rs 25,500 crore, which would be about 70% of the bank’s net worth of Rs 37,000 crore as of December 2020.

In a report released on Monday, Macquarie Research said stressed loans, as defined by all advances overdue by more than 30 days, are at about Rs 28,000 crore. Against this, Yes Bank has a provision coverage ratio of just about 10%.

As on Dec. 31, Yes Bank’s capital adequacy ratio stood at 19.6%, only marginally lower than 19.9% reported as on Sept. 30, 2020. At the end of the third quarter, the bank’s common equity Tier-1 capital stood at 13.1%, higher than the regulatory minimum requirement of 5.5%.

Kumar said. Yes Bank is seeking regulatory approvals to set up an asset reconstruction company outside the bank to manage the stressed assets on its book, by collaborating with international distressed asset funds, he said.

Prashant Kumar, managing director and chief executive officer at Yes Bank, said in an interview with BloombergQuint.

Since March 31, 2020, Yes Bank has also written-off loans worth Rs 8,274 crore.

In March, bank had gross bad loans of 16.8% and stressed assets of 33%.

The pool of stressed assets at Yes Bank has risen to 28% of its net advances as of the quarter ended Dec. 31. This included bank’s reported gross non-performing assets, which make up 15.36% of advances or Rs 29,547 crore.

In addition, the bank has a stressed asset pool of Rs 18,551 crore.

Taken together, the bank’s total stressed assets are at Rs 48,000 crore or 28% of advances.

The stressed portfolio includes Rs 8,322 crore in loans which have not been tagged as NPAs because of the Supreme Court’s stay on asset classification. That takes the pro forma gross NPA ratio to nearly 20%. The rest of the stressed asset pool is made up of loans overdue by more than 60 days and those restructured. Overall, across these categories, Rs 8,062 crore in loans has been restructured under the RBI’s one-time restructuring scheme.