Yes Bank stock tanks 9% after 80% drop in Q3 profit

Shares of Yes Bank Ltd plunged over 9% on Monday after the private lender reported an 80% year-on-year drop in its net profit, dragged down by ageing related provisions. Net profit of Yes Bank stood at ₹52 crore during the third quarter compared with ₹266 crore in the year-ago period. The lender's non-tax provisions jumped 125% year-on-year to ₹845 crore.

Following the quarterly results, the Yes Bank stock dropped over 9% to ₹17.85 apiece on the National Stock Exchange (NSE).

YES Bank's net interest income (NII) — the difference between the interest income from lending and that paid to depositors — rose 11.7% year-on-year to ₹1,971 crore in Q3. The lender's net interest margin rose 10 basis points year-on-year to 2.5% in Q3 FY23.

The bank's loan book grew by 10.4% year-on-year to ₹194,573 crore. Deposits jumped 16% to ₹213,608 crore.

Yes Bank's asset quality improved as gross non-performing assets declined to 2% during the third quarter from 12.9% in Q2 FY23. Net non-performing assets declined to 1.03% in Q3 from 3.6% in the previous quarter.

Yes bank transferred stressed assets worth ₹48,000 crore to asset restructuring company JC Flowers in November last year.

"With successful transfer of stressed Assets to the JC Flowers ARC, the GNPA and NNPA Ratios have now declined to 2% and 1% respectively which is the lowest since Q3FY19. At the same time, the operational momentum of the bank continues with further step-up in disbursements across segments and highest operating profit in the last eight quarters," says Prashant Kumar, managing director and chief executive officer, Yes Bank.

The lender raised ₹8,900 crore in the third quarter from private equity investors. It also appointed Sunil Kaul of PE firm Carlyle and Shweta Jalan of Advent International as additional directors on the board.

In December 2022, the Reserve Bank of India (RBI) had given a conditional approval to private equity investors Carlyle Group and Advent International to acquire up to 9.99% each in private lender Yes Bank.

The bank raised the funds through a combination of about $640 million in shares and about $475 million in share warrants.

"During the quarter, the Bank successfully closed two deals which are strategic and transformational in this new journey of the bank. The successful capital raise has aided in significant expansion in our Capital Base, and post full consummation, our CET-I Ratio will reach an extremely comfortable level," says Kumar.

In a separate development, the Bombay High Court on Friday quashed Yes Bank's March 2020 decision to write off ₹8,415 crore of additional tier 1 (AT1) bonds but it gave the lender six weeks to appeal the decision.