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YES Bank shares plunged nearly 30 per cent on Tuesday on the BSE after the private sector lender posted a loss for the fourth quarter of FY19. The bank’s scrip fell 29.23 per cent to close at ₹168 on the BSE.
Rating agency Moody’s Investors Service said there will be a strain on the asset quality and profitability for the next 12-18 months, but the de-risking will prove credit-positive.
Stock downgraded
Brokerage firms, including Macquarie, SBC and Citi, have, however, downgraded the stock and cut the target price.
In an analyst call, YES Bank’s new MD and CEO Ravneet Gill said the bank will focus on the transaction and retail banking business. It will also follow a conservative accounting policy on corporate fee recognition, he added.
The bank expects loan growth of 20-24 per cent in FY20, from about 34 per cent between FY14 and FY19, with the retail book growing faster.
Over the next 5-6 years, YES Bank is looking at an advances mix where 50 per cent comes from retail and small and medium enterprises and the rest from the corporate portfolio.
“With the bank’s strategy shifting toward building a strong retail franchise and corporate governance/ transparency, balance sheet growth is likely to moderate,” noted Motilal Oswal.
YES Bank had on April 26 posted a Q4 net loss of ₹1,506.64 crore as provisions jumped more than eight-fold to ₹3,661.7 crore.
The bank is part of the consortium of lenders to debt-ridden Jet Airways. Its gross slippages amounted to ₹3,481 crore in the quarter ended March 31, it had said. Of this, ₹552 crore was from exposure to an airline, it said, without naming the carrier, while ₹529 crore was to IL&FS, another entity that has been defaulting on debt.
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