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Provisions for COVID-hit loans make Yes Bank report Rs 3,790 cr loss in Q4

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Mumbai, Apr 30 (PTI) Yes Bank on Friday reported a Rs 3,790 crore loss on a consolidated basis for the March quarter, as against a profit of Rs 2,665 crore in the year-ago period, as the asset quality reverses faced due to the COVID-19 pandemic forced the bank to set aside money for potential loan losses.

The bank, which had to be bailed out in a SBI-led rescue a year ago, narrowed its losses in FY21 to Rs 3,488 crore as against Rs 16,432 crore in FY20.

On a standalone basis, it reported a loss of Rs 3,787 crore in the March quarter as against a Rs 2,628 crore net profit in the year-ago period.

Its managing director and chief executive Prashant Kumar on Friday laid out a slew of targets which the bank will be chasing in FY22, with special focus on recoveries.

Asserting that the worst on the asset quality front is over, Kumar said the bank is again aiming to recover at least Rs 5,000 crore in FY22.

He added that the overall cash recoveries will be more than the fresh slippages, providing money for which impacted the performance in January-March period.

The bank witnessed fresh slippages of over Rs 11,800 crore in the March quarter, following the Supreme Court order allowing banks to recognise asset quality stress after the moratoriums.

Kumar said the fresh slippages are not legacy troubled accounts, but newer assets in sectors like commercial realty and hospitality which bore the brunt of the COVID-19 pandemic, and exuded confidence that once the economy opens up, the assets will be upgraded.

Most of these loans already featured in the disclosures made at the end of December quarter as proforma NPAs, he said, adding that the bank decided to insulate the impact of this on future earnings by doing an accelerated provisions in Q4 FY21 results itself.

It has taken the provisions on non-performing loans to 79 per cent and non-performing investments to 92 per cent, Kumar said.

The overall provisions moved up to Rs 5,239 crore during the March quarter, as against Rs 4,872 crore in the year-ago period and Rs 2,198 crore in the December quarter.

The operating profit for the quarter stood at Rs 184.88 crore as against Rs 106.41 crore in the three months to March 2020.

The core net interest income slipped to Rs 987 crore as against Rs 1,274 crore on a 2.7 per cent dip in overall advances, and narrowing of net interest margin to 1.6 per cent.

There were two interest reversals during the quarter -- Rs 750 crore on account of the about Rs 12,000 crore fresh slippages and also Rs 144 crore on 'interest on interest' booked earlier.

The non-interest income grew 36 per cent to Rs 816 crore on its best-ever retail fees performance.

The bank is targeting to grow the overall loan book by 15 per cent in FY22, and will maintain the retail growth at 20 per cent, Kumar said.

Retail and small business loans now account for 51 per cent of the book.

Corporate loans, which resulted in the bail out, will be slowly started again and the bank aims for a 10 per cent growth in the segment, Kumar said, adding that during the March quarter it disbursed Rs 3,500 crore of fresh loans.

The overall stock of gross non-performing assets reduced to 15.41 per cent as against 16.80 per cent in the year-ago period.

It expects to restructure Rs 2,500 crore of loans in the June quarter, most of which will be in the corporate segment, he said.

Yes Bank is aiming for the deposits to grow faster than the advances in FY22, with a stress on granular retail deposits, Kumar said, specifying that the credit-deposit ratio will come down to 100 per cent.

The bank improved its cost to income ratio to 53 per cent from over 66 per cent in the year-ago period, and the time ahead will see a normalisation in this metric, Kumar said, adding that there was an across-the-board rationalisation of costs which helped in this number.

He further noted that the bank's plan to have a separate asset reconstruction company (ARC) was rejected by the RBI in its current form, but the same continues to be pursued. It will now await the guidelines to be set by an RBI panel before deciding its future course.

The capital adequacy ratio stood at 17.5 per cent as of March, and the current buffers strengthened through a Rs 15,000 crore raise in FY21 will ensure that its FY22 growth plans are met.

Kumar also said the economy will not be as severely impacted by the second wave of COVID-19 infections as the first wave but added that over a tenth of the bank's staffers have been impacted in the fresh wave.

The bank scrip closed flat at Rs 14.55 a piece on the BSE on Friday as against a 1.98 per cent correction on the benchmark. PTI AA ABM ABM

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