YES Bank shares up 3%; bank dispels concerns over exposure to stressed firms

A day after YES Bank stock tumbled 8 percent following downgrade of its stock by a foreign brokerage firm, it has rebounded today in a lacklustre broad market sentiment rising nearly 3 percent in early trade.

At 10.55 am, YES Bank shares were quoted at Rs 807.25, up 1.2 percent from the previous close, after touching a high of Rs 820 in early trade, up 2.9 percent.

 YES Bank shares up 3%; bank dispels concerns over exposure to stressed firms

On Wednesday, brokerage firm UBS downgraded the bank's stock to 'sell' raising concerns that the private lender's loan exposure to stressed firms as a percentage of FY15 loans was the highest at 19 percent followed by ICICI Bank (14 percent) and PNB (10 per cent).

"It is most vulnerable to a large corporate default," said UBS. "Estimated loans to potentially stressed firms recorded a 60 percent compounded annual growth rate over FY12-15E and would be 125 percent of the net worth for YES Bank. We believe consensus is not factoring in a sharp increase in credit costs for YES Bank," the brokerage said in its report.

However, the bank has clarified that the acutal quantum of exposure on its books is significantly lower than that mentioned in the UBS report.

Countering the UBS report, another foreign brokerage firm Macquarie Research in its report has highlighted that the proportion of risk-weighted asset to total assets for YES Bank is better than average of its private sector peers over the years.

"In fact, in terms of RWA to total assets, YES Bank is even better than IndusInd and ICICI Bank," Macquarie said in its report.

The brokerage has maintained outperform with a target price of Rs 1,020 a share for YES Bank.

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Updated Date: Jul 09, 2015 11:31:22 IST