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Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on Yes Bank Q4 2020 results

Posted On: 2020-05-07 21:47:50


"The Q4 results of Yes Bank expectedly, indicate that its operating challenges will not only continue to remain for the next few quarters but may get further aggravated due to the Covid crisis. Notwithstanding the upfront capital infusion of Rs. 10,000 Cr by a group of banks led by SBI and the write-down of perpetual bonds amounting to Rs. 8,415 Cr, the bank's CET1 capital position remains below the regulatory requirements, given the large spike in provisions necessary to address the inherent stress in both the loan and the investment book. Clearly, the bank will need to raise additional capital of the order of Rs. 5,000-10,000 Cr in the near term to not only meet the regulatory requirements but also to absorb the incremental losses for the current year. The ability to raise Capital 2.0 from the existing or new investors within defined timelines and continued regulatory support for such equity mobilisation efforts will be the key to the sustainability of the bank. While the reported NPAs have declined in Q4 due to writeoffs and the provisioning cover is healthy at 74%, there are significant risks of further slippages in the corporate portfolio post the end of the Covid moratorium. However, the concerns on the deposit franchise have mitigated to some extent post the new shareholding structure; subsequent to the withdrawal of Rs. 32,000 Cr of deposits, mostly of a bulk nature in March, the withdrawals have relatively subsided during April. Therefore, the key imperatives for the management at this time are to arrest any further deterioration and build granularity in the deposit franchise while focussing on raising fresh capital within the next few months."

Shares of YES BANK LTD. was last trading in BSE at Rs.28.15 as compared to the previous close of Rs. 26.35. The total number of shares traded during the day was 7473824 in over 43649 trades.

The stock hit an intraday high of Rs. 31.6 and intraday low of 25.25. The net turnover during the day was Rs. 217481727.


Source: Equity Bulls

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