Yes Bank Share price today: Asset Quality issues will remain in focus highlights Elara Capital and Anand Rathi

Yes Bank Share price today: Elara Capital highlights that the new stressed loans stood at 17% while outstanding stress stood at 39% for Yes Bank. PAT of Rs 1.5 bn in Q3 FY21 grew 16% QoQ but declined 101% YoY. While there was strong sequential growth in Yes Bank operating profit and deposits, asset quality deteriorated sharply.

New standard stress loans including standstill NPLs, SMA1, SMA2 and restructured loans were uncomfortably high at Rs 282 bn or 17% of total loans in Q3 FY21 versus 5% in Q2 FY21. Reported GNPLs of Yes Bank stood at 15% vs 17% QoQ. Yes Bank total outstanding stress loans rose sharply to 39% from 29% QoQ with proforma GNPLs rising from 18% to 20% and standard stress loans rising from 11% to 19%.

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Standstill Yes Bank corporate NPLs of Rs 51 bn were spread over 3000 accounts indicating that the average ticket size of corporate NPLs was low and there were no lumpy accounts. New corporate stress was mainly from hospitality and real estate. Yes Bank Retail loans accounted for 17% of standstill NPLs and 12% of SMA2 loans. Collection efficiency in retail was 96%, close to the pre-Covid level of 97%. Fresh restructuring including overlaps with SMA and standstill GNPLs, stood at 5% in Q3 FY21, while excluding overlaps it was lower at 0.7%.

Yes Bank Deposits grew strongly at 8% QoQ though YoY there was a decline of 12%. CASA deposits grew 13% QoQ but declined 29% YoY. Loans grew 2% QoQ but declined 9% YoY. Adjusted NIM would be lower at 2.9% vs reported NIM of 3.4%.

Anand Rathi says that with an expected higher slippage rate when the NPA standstill is lifted, Yes Bank has built in 4.5% credit costs for FY21. Higher credit costs and the weaker operating performance (attributed to slower business growth) at Yes Bank would lead to negative earnings in the near term. Yes Bank management said major stress in the corporate book stems from the real-estate and hospitality sectors.