Yes Bank shares plunge 30% after weak Q4 results; Jet Airways exposure hurts lender

Yes Bank is part of a group of lenders to debt-ridden Jet Airways, which was forced to ground all flights earlier this month after it ran out of funds

FP Staff April 30, 2019 12:30:28 IST
Yes Bank shares plunge 30% after weak Q4 results; Jet Airways exposure hurts lender
  • Yes Bank Ltd shares plunged 30 percent on Tuesday after the private-sector lender surprised markets last week with its first quarterly loss

  • Yes Bank is part of a group of lenders to debt-ridden Jet Airways, which was forced to ground all flights earlier this month after it ran out of funds

  • Gross slippages, or accumulation of fresh bad loans, came in at 34.81 billion rupees ($498.6 million) in the quarter ended 31 March,

Yes Bank Ltd shares plunged 30 percent on Tuesday after the private-sector lender surprised markets last week with its first quarterly loss on the back of a nine-fold jump in provisions for bad loans.

Yes Bank shares opened at Rs 213.70 on BSE and dropped over 29.76 percent in intraday on NSE. At 11.58 am, the scrip was trading at Rs 171.15 on NSE, down 27.91 percent from its previous close.

The Indian banking sector has been struggling with high levels of non-performing assets, exacerbated by weak performances in the infrastructure and airline sectors.

Yes Bank is part of a group of lenders to debt-ridden Jet Airways, which was forced to ground all flights earlier this month after it ran out of funds.

Gross slippages, or accumulation of fresh bad loans, came in at Rs 3,481 crore,  in the quarter ended 31 March, Yes Bank said. Of this Rs 552 crore was due to exposure to Jet Airways. Around Rs 529 crore was on account of stressed infrastructure conglomerate IL&FS.

Analysts at brokerage Investec said the slippage number included exposure to Jet, IL&FS, two real estate companies, small and medium enterprises as well as the retail sector.

“This is significantly higher than the normalised run-rate the bank reports,” they said in a note.

Yes Bank shares plunge 30 after weak Q4 results Jet Airways exposure hurts lender

Representational image. Reuters.

Macquaries double downgrades Yes Bank stock

Australian brokerage Macquarie has double downgraded Yes Bank stocks, according to media reports.

The brokerage firm has downgraded the stock to 'underperform' and cut target price by 40 percent to Rs 165, which is one of the lowest, a report in The Economic Times said.

Macquarie has admitted to overlooking the risks from the structured finance business of Yes Bank and has downgraded the stock by a full two notches.

Citing the management commentary following the bank reporting its first-ever loss of a whopping Rs 1,506-crore for the March quarter under new management led by Ravneet Gill, the brokerage also flagged concerns on the fee income and the retail franchise of the fifth largest private sector lender.

The bank led by Rana Kapoor, who was forced out by the Reserve Bank of India (RBI) earlier this year for reportedly under-reporting bad loans and for poor governance standards, had booked a net income of Rs 1,179 crore in the year-ago period.

The bank reported results on 26 April after markets closed. Markets were closed on Monday on account of elections.

This was the Mumbai-based bank’s first quarterly results under new boss Ravneet Gill, after a spat with the central bank forced founder Rana Kapoor out the door in February.

“The new managing director’s business strategy is good in the long run, but medium-term woes in terms of asset quality, management uncertainty and subdued return ratios are inevitable,” Emkay Research said in a note.

In the earnings statement on Friday, Gill said the bank would focus on digitisation while maintaining the “highest standards on compliance and prudence in risk”.

On 26 April, the company reported quarterly loss of Rs 1,507 crore as compared to Rs 1,179.44 crore in the quarter ended March 2018. Net NPA grew from 1.18 percent to 1.86 quarter-on-quarter. Provisions jumped to Rs 3,661.70 crore in Q4 from Rs 399.64 crore in the year-ago period.

 Yes Bank’s stock dived as much as 30 percent on very high volumes in on Tuesday, it’s biggest intraday percentage loss since 21 September, 2018.
--With inputs from agencies

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