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YES Bank hits over three-year low; tanks 43% in three weeks post Q4 results

SI Reporter/Mumbai 16 May 19 | 02:03 PM

Shares of private lender YES Bank continued to reel under pressure, hitting 38 months low of Rs 136 apiece, down 6 per cent intra-day on the BSE. The stock was trading at its lowest level since February 29, 2016.


The market price of the lender has slipped 13 per cent in past two trading sessions after the Reserve Bank of India (RBI) appointed former deputy governor Rama Subramaniam Gandhi as an additional director on the board of the private sector lender for two years.

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YES Bank has tanked 43 per cent since April 26 after the bank posted its first ever net loss of Rs 1,506 crore for the March quarter. The shares, which were trading at Rs 237 per share before the Q4 results were announced, have slipped on the surprise net loss posted by the bank on the back of the provisions soaring over nine times. It had posted a profit of Rs 1,179 crore in the year-ago period. In comparison, the benchmark S&P BSE Sensex was down 5 per cent during the same period.

"The bank is likely seeing a sluggish corporate asset growth due to capital constraints, and is realigning corporate products. The bank has also aggressively recognized stressed assets and is likely to continue to assess losses based on time value erosion," analysts at Dolat Capital said.

The brokerage firm further added that the bank was expected to "pause the growth in its mainstay corporate book to realign some products". 

"(Ravneet) Gill believes that the liability side has more potential and needs attention. It plans to undertake branch expansion and increase feet on street (2100+) for the same. The lower incomes from erstwhile mainstay corporate products, and higher investments and credit costs are expected to dent return on assets (RoA)," the brokerage firm said in result update.

Ravneet Gill was appointed as the chief executive order early March, 2019.

Meanwhile, most of the rating agencies – CARE Ratings, Brickwork Ratings (BWR), Icra and India Ratings (Ind-Ra) –  have also downgraded the bank's long-term ratings with a negative outlook.

"The downgrade reflects the quick credit migration (to sub-investment grade) in the bank’s certain group exposures. We expect some of these assets to slip into the non-performing category; the need to provide beyond Rs 2,100 crore of contingent provisions in FY19 and credit cost guidance of 1.25 per cent for FY20 in the event of inadequate or delayed resolution of these assets could keep the operating buffers and capital buffers under further pressure in the 15%-20% growth scenario," India-Ra said in its ratings review rational.

The 'negative' outlook, according to the rating agency, reflected the downside risks to the agency’s estimates of profitability and capital buffers that could emanate from substantial delays in the resolution of certain stressed assets.

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