Yes Bank Q4 results: posts Rs 2,629 cr net profit on gains from AT-1 bond write-off

Yes Bank on Wednesday reported a net profit of Rs 2,629 crore for the March quarter, helped by a massive gain of over Rs 6,200-crore arising out of a controversial write-off of bond investors' investment.

If the one-off gain is excluded, then the bank, which was bailed out by a consortium-led by SBI in March, has a loss of Rs 3,668 crore in the latest quarter under review.

The private sector lender had a loss of Rs 18,560 crore loss in the December quarter while the loss was at Rs 1,506 crore in the March 2019 quarter.

The one-time gain is from the write-off of Additional Tier-I bondholders' Rs 8,419 crore investment, according to a release.

For the fiscal year 2019-20, Yes Bank reported a loss of Rs 16,481 crore, It had a profit of Rs 1,720 crore in the year-ago period.

As part of the the bailout process, the AT-1 bond holders' investment was written-off citing existing rules which gave the new management of the bank a huge breather to get the operations out of the restrictions imposed by RBI and the government on March 5, and start functioning normally.

The bank, which is now headed by SBI's former CFO Prashant Kumar, showed a marginal improvement in the gross non-performing assets ratio at 16.80 per cent in the March quarter as against 18.87 per cent in the three months ended December 2019.

Its overall provisions came at Rs 4,832 crore and the money set aside for NPAs came down to Rs 1,100 crore in the latest March quarter. In the three months ended December 2019, the lender had NPA provisioning of Rs 22,328 crore.

Net advances declined 29 percent to Rs 1.71 lakh crore in the latest quarter under review compared to March 2019 quarter and nearly 8 per cent as against December 2019 quarter.

Deposits at Yes Bank more than halved in the three months ended March compared to the year-ago period.

The core net interest income rose 19.6 per cent sequentially to Rs 1,274 crore in the March quarter. Non-interest income grew 12.3 per cent to Rs 597 crore in the three months ended March compared to the same period a year ago, the release said.

The bank said its strategic focus area of retail has shown resilience despite the lockdown and was one of the key contributors to the business performance during the March quarter.

The overall capital adequacy of the bank stood at 8.5 per cent as of March 31 with the core Tier-I at 6.3 per cent.

To avoid a possible collapse of Yes Bank, RBI had sacked its management and placed the lender under an administrator on 5 March with a 30-day moratorium, which was later on curtailed to nearly two weeks.

The moratorium on the bank which restricted cash withdrawals limits to only Rs 50,000 was lifted after banking hours on March 18.

On 13 March, the government notified the rescue plan drafted by the RBI.

As part of the ‘Yes Bank Limited Reconstruction Scheme 2020', SBI and other investors made equity capital infusion to the tune of Rs 10,000 crore. Private lenders ICICI Bank, Axis Bank, Kotak Mahindra Bank, IDFC First Bank, Bandhan Bank, Federal Bank and mortgage lender HDFC Ltd have also infused capital of over Rs 3,000 crore in cash-starved Yes Bank to keep it afloat.

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YES Bank Q3 results: Bank reports record loss in Dec quarter

Private sector lender Yes Bank Ltd. reported its largest ever quarterly loss in October-December quarter as it saw a surge in bad loans. The increased provisions needed to cover for the loans depleted the bank's capital.

For the quarter ended December 2019, Yes Bank reported a loss of Rs 18,564 crore compared to a profit of Rs 1001 crore in the same quarter last year. In the preceding quarter, Yes Bank had reported a net loss of Rs 600 crore.

The bank’s net loss would have been wider at Rs 24,778 crore in the third quarter, if it weren’t for a tax write back of Rs 6,214 crore.

The bank reported a surge in bad loans which led to a jump in provisions that need to set aside against the soured debt.

Gross non-performing assets rose to Rs 40,709.20 crore, or 18.87 percent of the bank’s total loan book. At the end of the September quarter, bad loans stood at 7.39 percent of the loan book. The bank’s net NPA rose to Rs 11,114 crore, or 5.97 percent of net advances, from Rs 9,757.20 crore in the September quarter.

Yes Bank set aside Rs 24,765.73 crore in provisions during Q3, which led to a depletion of its capital.

The capital base--specifically the Core Equity Tier-1 ratio--fell to 0.6 percent at the end of the quarter compared to 8.7 percent in the September quarter. The minimum regulatory requirement stands at 7.375 percent. Overall capital adequacy ratio dropped to 4.2 percent from 16.3 percent in the preceding quarter.

It’s statutory liquidity ratio has breached the RBI’s minimum requirement and so has its liquidity coverage ratio. The bank has thus provided Rs 86 crore as penalty to the central bank.

Deposit Outflows

As on Dec. 31, 2019, the bank’s outstanding deposit base stood reduced to 1.65 lakh crore from Rs 2.09 lakh crore on Sep. 30, 2019. The lender continues to see an outflow of deposits since Dec. 31; its total deposits stood at Rs 1.37 lakh crore, as on Mar. 5.

The outflow of deposits was most marked in the savings account segment, where typically low value deposits are kept with the bank. As on December 31, savings account deposits dropped to Rs 29,764 crore from Rs 44,579 crore a year ago. Similarly, term deposits fell to Rs 1.12 lakh crore at the end of the third quarter, from Rs 1.48 lakh crore last year.

Advances came down to Rs 1.86 lakh crore vs Rs 2.24 lakh crore in September. Domestic corporate advances fell to Rs 90,695 crore as on December 31, from Rs 1.46 lakh crore a year ago. Retail advances increased to Rs 41,289 crore from Rs 37,117 crore in the same period

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AIBEA Supports For Government Undertaking of 'Yes Bank', Demands Accountability of RBI

All India Bank Employees' Association (AIBEA) on Saturday said the Reserve Bank must be held accountable and the government should start taking all the private sector banks under its fold.

"At the same time, in order to protect the interest of the depositors and bank's clients, Yes Bank should be immediately brought under the public sector. One by one private banks, which are being glorified by the government, are failing. It is high time that the government should take a call and repeat 1969 - all the private banks should be brought under public sector," said C H Venkatachalam, General Secretary, AIBEA.

"The fact that Yes Bank has been ailing with various problems including issues of divergence, non-disclosures, mounting bad loans, inadequate capital, inability to augment capital, etc.

"But the RBI took its own sweet time and after a lot of damage, it has announced the moratorium creating panic amongst the depositors."

The bank union said the RBI, being the regulator, cannot be unaware of the ongoing in Yes Bank.

"If today, the bank has to be closed down due to mismanagement, the RBI cannot extricate itself from the responsibility. Every time, the RBI is failing to take timely steps to prevent such bank debacles. Same thing was observed during United Western Bank and Global Trust Bank," Venketachalam said.

The AIBEA said there were repeated audit reports which pointed out glaring lapses and yet the RBI did no act. Same thing has happened now.

"The government must make RBI answerable and accountable. It is strange that the RBI is putting various banks under Prompt Corrective Action - PCA restrictions. In fact, we feel that the government should bring the RBI under PCA norms," he added.

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Govt asks SBI to form consortium to buy stake in YES Bank: Report

The government has approved a plan for country’s largest lender, State Bank of India, to lead a consortium that will buy a stake in private lender Yes Bank, news agency Bloomberg reported on Thursday.

State Bank of India has been authorized to pick other members of the consortium and the announcement is expected soon, the report said.Following the development, shares of YES Bank jumped 9.56 per cent to hit a high of Rs 32.10 on BSE. Shares of state-run SBI fell 3.01 per cent to Rs 276.70.

As per media reports, SBI has been told to invest as a lead in a consortium in Yes Bank. Though we may see a big spike in price of Yes Bank and negative reaction in price of SBI, we recommend caution to retail investors. The critical thing to watch would be percentage dilution of equity taking into consideration the conversion of existing bonds issued by Yes Bank into equity," said Abhimanyu Sofat, Head Of Research, IIFL Securities.

Earlier in January, the chairman of the bank had expressed his strong belief that “some solutions will emerge” to bail out the private lender.

YES Bank has so far failed to bring a strategic investor. Reports recently suggested that the private bank had approached mutual funds for raising fresh equity capital worth $300-$500 million.

The private lender had earlier said it has delayed its third-quarter earnings as the bank is reviewing non-binding expressions of interest from four investors.

YES Bank had plans to raise up to $2 billion to shore up its capital base.

It had picked Cantor Fitzgerald, led by former Deutsche Bank global co-CEO Anshu Jain, and local investment banks IDFC Securities and Ambit Capital to raise funds that would help the lender expand its loan book.

Recently, the private lender received non-binding expressions of interest from investors including JC Flowers, Tilden Park Capital, OHA UK and Silver Point Capital.

Also, a media report last month suggested Hinduja Group was partnering with private equity firm Cerberus Capital Management LP in seeking to pick up a stake in embattled Yes Bank.

However, nothing materialised till date.

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This Private Bank's existance is in trouble - Which bank is capable to digest it?

Before it results in a tragedy for all of India’s banking, regulators need to step in and end the farce called Yes Bank Ltd. The latest shenanigans make it very clear that the authorities need to stop being spectators — and act.

The original cast has vanished. The co-founder who drove the country’s fifth largest private-sector bank into a ditch of bad corporate loans has sold out. Institutional shareholders are heading for the exit. Retail investors left holding more and more of the stock are waiting for lifesaving capital.

The new management keeps dangling improbable funding options — ranging from an unnamed global technology firm to a Canadian businessman living in a motel — only to strike them off the list of white knights.

Day Traders' Delight

The only thing ticking at the bank is the clock. Common equity tier 1 may just about manage to stay above the regulatory threshold of 8% by March. But 36% of capital is tied up in bad debt that’s yet to be provided for. More loan losses lie around the corner. With 40% of deposits coming from fickle wholesale sources, solvency and liquidity risks are high.

At a time when India’s financial system is choking on hundreds of billions of dollars of bad loans, the news coming out of Yes still manages to shake confidence.On Friday, the lender announced that the head of the board’s audit committee, appointed under previous management, had quit. Following whistle-blower allegations of undisclosed past criminal cases, the bank was examining whether Uttam Prakash Agarwal was “fit and proper” to be a director.

But Agarwal, who says the missed disclosures were an omission, pulled the trigger first. In a letter, he called for a forensic audit of the fundraising process — and its communication to the board and the public — to probe if it was “false, misleading or distorted.” The stock, down 88% over the past 17 months, fell more than 5% on Friday.

Following Agarwal’s salvo, the only way Chief Executive Officer Ravneet Gill can salvage the situation and his own reputation is by quickly raising around 3% of risk-weighted assets worth of capital. That’s a bare minimum. Yet after nearly a year in the job, the ex-Deutsche Bank AG veteran has little to show for his efforts. Most recently, the board ruled out taking money from Erwin Braich, the mysterious Canadian investor. And that, as far as one can see, is the end of the road in Gill’s search for an investor who will write a check in excess of $1 billion for a lender that’s still hurtling down a rabbit hole.

Fault Lines

An independent existence for Yes is increasingly unrealistic. There’s no safe way to shut it down without inviting system-wide panic. Depositors are already on the edge, trapped in a cooperative bank that failed. What else can be done?

I’ve previously explored the possibility of a merger with Kotak Mahindra Bank Ltd., which like Yes is also a private-sector lender. But Chairman Uday Kotak, whose good fortune has been all about saying no to loans to which Yes said yes, seems uninterested.

State Bank of India, India’s largest commercial lender by assets, may hate the idea of a forced merger. But let’s face it: No other banking balance sheet in India might be able to take over a lender with more than $31 billion in advances. More importantly, the SBI is a public-sector bank; if CEO Rajnish Kumar can be prevailed upon to swallow Yes, he can always be given some taxpayers’ funds to help with the indigestion.

Who Can Digest Yes?

Time is not on India’s side. Nominal GDP is expanding at its slowest in more than four decades. An implosion at the bank will be awful news for construction, real-estate and shadow banking, three crucial sectors starved of funding that comprise a quarter of Yes Bank’s loan book. This negative feedback loop could be more damaging to confidence than even the surprise bankruptcy of infrastructure financier IL&FS Group in September 2018, which led to an economy-wide surge in borrowing costs.

After Agarwal’s letter to the stock exchanges, the regulator and the government, none can pretend to be in the dark any longer about the state of affairs at Yes Bank. It’s time they brought the curtain down on this theater of the absurd.

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Yes Bank reports net loss in Q2FY20

Private sector lender Yes Bank today reported a net loss of ₹600 crore in the quarter ending September 30, hurt by a one-time deferred tax adjustment of ₹709 crore on account of change in corporate tax rate regime. Excluding this impact, adjusted net profit was at ₹109 crore. Yes Bank had reported a net profit of ₹964 crore profit in the same quarter of the previous year.

Yes Bank's bottomline was also hurt by a rise in provisions to ₹1,336 crore in the September quarter, as compared to ₹939 crore in the year-earlier quarter.

The asset quality worsened on a sequential basis. Gross NPA as a ratio of total advances rose to 7.39% in September quarter as compared to 5.01% in the June quarter. Net NPA rose to 4.35% as compared to 2.91%.

Yes Bank had on Thursday disclosed that it has received a binding offer from a global investor for an investment of $1.2 billion, subject to regulatory and and other necessary approvals.

The bank in its earnings report today also said that it has received multiple other non-binding but strong bids from marquee domestic and global institutional investors and family offices.

"The board is evaluating all bids to ascertain the most optimal capital solution for the bank," it added. Yes Bank had raised $273 million via QIP route in the September quarter.

Yes Bank shares today closed 5.5% lower ahead of the earnings announcement, following a nearly 25% rally on Thursday.

Yes Bank also reported a rise in employee headcount by 2,466 during the second quarter, mainly in retail/branch banking.

Here are the highlights of Yes Bank Q2 earnings:

Net interest income at ₹2,186 crore in Q2FY20 and it includes the impact of ₹228 crores due to fresh slippages during the quarter

Net interest margin at 2.7%

Non-interest income at ₹946 crores

10% sequential growth in retail banking fees

Operating expenses at ₹1,673 crores for Q2FY20

Pre-provisioning operating profit at ₹1,458 crores for Q2FY20

Provisions of ₹1,336 crore.

Book Value at ₹109.0 per share as on September 30, 2019

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Yes Bank Q1 result, Profit down 91%

Yes Bank Ltd today said its first quarter net profit dropped 90.97% on the back of lower other income and higher provisioning.

The bank posted a net profit ₹113.76 crore for the three months ended 30 June compared to₹1,260.36 crore in the year-ago period. Profit was lower than ₹148 crore estimated by a Bloomberg poll of 13 analysts.

Other income, which includes core fee income, dropped 24.88% to ₹1,272.66 crore in the three months from ₹1,694.14 crore a year ago.

Yes Bank's provisions during the quarter increased more than two folds to ₹1,784.11 crore as against ₹625.65 crore in the year-ago quarter. In the Dec-Mar quarter, the bank had set aside ₹3,661.70 crore in provisions.

Net interest income, or the difference between interest earned on loans and that paid on deposits, increased 2.78% to₹2,280.84 crore from ₹2,219.14 crore in the corresponding period last year.

Yes Bank's gross non-performing assets (NPAs), as a percentage of total advances, were at 5.01% in the June quarter compared with 3.22% in the March quarter and 1.31% in the year-ago June quarter.

Post-provision, the net NPA ratio was at 2.91% against 1.86% in the Dec-Mar quarter and 0.59% in the year-ago quarter.

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Yes Bank surprisingly reports its first ever quarterly loss

Private sector lender Yes Bank Ltd on Friday reported its first-ever quarterly loss at ₹1,506.64 crore on the back of higher provisions. The bank would have reported a steeper loss if not for a tax write-back of ₹832 crore in the March quarter.

Meanwhile, the bank’s board approved the appointment of Ravinder Kumar Khanna and Shagun Kapur Gogia as additional directors (non-executive, non-independent) with immediate effect. Interestingly, in June 2013, Yes Bank’s board turned down Gogia’s application to be nominated as a director on the bank’s board.

Profit in the March quarter was lower than the ₹1,023.9 crore estimated by a Bloomberg poll of 23 analysts. Total provisions during the quarter increased more than nine-fold to ₹3,661.7 crore, as against ₹399.64 crore in the year-ago quarter. In the December quarter, the bank set aside ₹550.23 crore in provisions.

Yes Bank’s other income, which includes core fee income, dropped 62.58% to₹531.69 crore from ₹1,420.97 crore in the year-ago quarter.

Net interest income (NII)—the difference between interest earned on loans and paid on deposits—increased 16.33% from ₹2,154.24 crore in the March quarter of 2018 to ₹2,505.93 crore in March quarter 2019. Its net interest margin (NIM)—a key measure of profitability—fell 30 basis points (bps) on a year-on-year basis and 20bps, sequentially.

In a filing to the stock exchanges, it said gross slippages in the fourth quarter stood at ₹3,481 crore, of which ₹552 crore was on account of an airline, and₹529 crore on account of a stressed infrastructure conglomerate.

The bank has an outstanding loan of₹2,528 crore to various companies and special purpose vehicles of Infrastructure Leasing & Financial Services, of which ₹2,442 crore has been classified as non-performing asset (NPA), with a specific provision of ₹610 crore prior to the National Company Law Tribunal order dated 25 February.

“Subsequently, the bank has retained classification for the balance exposure of₹85.9 crore as standard, although this exposure would be required to be classified as NPA," Yes Bank said in the stock exchange filing.

Its gross NPAs, as a percentage of total advances, were at 3.22% in the March quarter compared with 2.10% in the December quarter, and 1.28% in the year-ago quarter. Post-provision, the net NPA ratio was at 1.86%, against the 1.18% in the December quarter, and 0.64% in the year-ago quarter.

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