Synopsis–Macquarie analyst Suresh Ganapathy pointed out that total stressed loans and loans overdue for more than 30 days stand at Rs 28,000, or about 16% of loan book over and above gross NPA of 15%.
Mumbai: A large stressed book totalling more than Rs 18,000 crore including loans not classified as non performing assets (NPAs) because of a Supreme Court stay and some due for more than 60 days and likely to slip, have alarmed analysts less than a year after an unprecedented bail-out of the private sector lender.
Results released by the bank late last week showed that although the bank’s gross NPAs reduced to 15.4% from 16.9% in September, NPAs could be close to 20%, taking into account the Rs 8,000-crore book the bank has restructured that could slip into NPAs and another Rs 10,000 crore which are stressed but not yet been classified as NPAs.
Macquarie analyst Suresh Ganapathy pointed out that total stressed loans and loans overdue for more than 30 days stand at Rs 28,000, or about 16% of loan book over and above gross NPA of 15%.
“While all overdue loans of 30 dpd (days past due) and 60-90dpd do not become NPLs, we remain concerned on the size of the loan book that is overdue. To put the overdue loan book in context, the size of net overdue loan book is Rs 25,500 crore (net of Covid provisions) and net worth of Yes Bank as of Dec 2020 is Rs 37,000 crore – roughly 70% of net worth,” Ganapathy said.
In a post result presentation on its website, Yes Bank has said loans not classified as NPAs due to the Supreme Court stay, loans overdue for more than 60 days and Covid 19 related advances add up to about Rs 18,551 crore or 11% of the bank’s loan book of Rs 1.69 lakh crore.
Then there are Rs 8062 crore of loans on which restructuring has been invoked by the bank according to the Kamath committee recommendations but some of which may not make the final cut if they do not receive a favourable rating or not are not able to meet the necessary financial thresholds.
“The stressed accounts for Yes Bank are higher vis a vis better named peers. Now with the Covid linked stress also taking shape it is difficult to predict how NPAs will pan out. The bank has many lower rated accounts so it is difficult to have confidence that it will not face more stress in the near future. Only time will tell,” said a analyst with a local brokerage. He refused to be named because the bank’s coverage is currently suspended from his brokerage.
Yes Bank CEO Prashant Kumar however expressed confidence that further provisions if required can be made through the bank’s profits in the next few months.
“We have made a total of Rs 2683 crore in provisions including a 15% provision on the SC mandated standstill account and a 10% provision on restructured loans. As we speak today everything is holding up well as we are confident that operating income from hereon will be enough to take care of more provisions,” Kumar said.
With a core equity capital of 13% Yes Bank is much higher than the regulatory requirements after raising Rs 14,267 crore through a follow on issue in July.
The bank board also approved an enabling resolution to raise Rs 10,000 crore at its board meeting last week.
It swung to a profit of Rs 151 crore in the three months to December from a record loss of Rs 18,560 crore in the year-ago quarter, due to higher loan disbursements to individuals and small and medium enterprises.
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