Yes Bank says NPA troubles to continue in FY21

Mumbai: Yes Bank expects pressures from sour loans, which led it to declare the highest loss for any private sector lender at Rs 18,654 crore for the December quarter, to continue even in FY21, but CEO-designate Prashant Kumar is confident of its survival after a Rs 10,000-crore capital infusion.

The bank witnessed withdrawals of over Rs 72,000 crore of deposits in the last six months to Rs 1.37 lakh crore, but the Rs 10,000 crore capital infusion, coupled with over 1,000 branches and a strong customer base makes Kumar confident of Yes Bank continuing to be a “going concern”.

“The proposed capital infusion and the bank's strong customer base and branch network will enable the Bank to continue its business for the foreseeable future, so as to be able to realise its assets and discharge its liabilities in its normal course of business,” the bank said, quoting Kumar's assessment.

Kumar is at present the bank's RBI-appointed administrator and will be taking over as CEO on Wednesday evening once the bank comes out of moratorium.

The heavy reverses on corporate lending nearly a third of the overall loans have turned sour have probably led the new management led by Kumar to earmark focus on retail and small business loans as a priority going forward, according to its investor presentation.

The bank has also made it clear that additional-tier 1 bonds of over Rs 8,500 crore will have to be written-down completely for the reconstruction to begin, setting the stage for a legal battle.

Kumar had to be installed as the administrator of the bank on March 5 by the RBI, after the government superseded its board due to an inability to raise much-needed capital.

However, in its investor presentation, Yes Bank said slippages, which went up to Rs 24,587 crore in the December quarter, will normalise only in FY22.

The bank told investors that it expects slippages to be at 5 per cent of the assets in FY21. The assets decreased by 22 per cent to Rs 2.90 lakh crore at the end of December 2019, as compared to the year-ago period.

Compared to the preceding quarter, advances overdue for 31 to 90 days (levels before they get tagged as NPAs), declined 43 per cent to Rs 13,911 crore.