Q1 effect: YES Bank shares tumble

Our Bureau Mumbai | Updated on July 18, 2019 Published on July 18, 2019

While CEO Gill is optimistic about future, analysts remain cautious

Private sector lender Yes Bank’s scrip fell nearly 13 per cent on Thursday, a day after it reported a 91 per cent drop in its net profit for the first quarter of the fiscal.

The bank’s share price hit a fresh five-year low and fell 12.85 per cent to close at ₹ 85.80 apiece on BSE.

YES Bank had posted a 91 per cent decline it its net profit at ₹113.76 crore in the quarter ended June 30, as against ₹1,260.36 crore a year ago.

Read also: YES Bank - For retail investors, is this a case of bottom fishing or catching a falling knife?

In an analyst call, the bank’s Managing Director and CEO Ravneet Gill was optimistic and said the quarters ahead look very positive.

“The first quarter for the bank was a quarter of consolidation with three key attributes: ongoing management transition, which is now complete; the second was... CET-1 of 8.4 per cent — it was a quarter for capital optimisation; and (third) also the macros were fairly challenged and financial services sector faced unprecedented headwinds. In a scenario with a backdrop of that nature, for us to be able to return to profitability shows the inherent resilience in YES Bank,” Gill said in the analysts concall.

Read more: YES Bank - Higher slippages, slowdown in loan growth weigh on performance

Brokerages, however, remained cautious with concerns over the asset quality.

“.. it does not surprise us that despite large slippages in the first quarter, the BB and below book has increased from ₹20,000 crore to ₹ 29,500 crore — a significant ₹14,000 crore (that’s a 70 per cent rise) in three months. It also does not surprise us that the bank’s exposure to DHFL and Reliance Capital and its subsidiaries’ bonds were not included in the BB and below book,” Macquarie said.

“On our deep dive, we believe only certain part of exposure can be resolved quickly, while large part of exposure slipping into NPAs remains a high chance which we have factored in the same over 2019-20 and 2020-21. Although we take comfort from imminent capital raise and operating profit would help mitigate large provisioning requirement, it should not see capital deterioration,” said Prabhudas Lilladher in a report.

Published on July 18, 2019
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