Yes Bank not out of woods, reports Rs 629 cr loss for Q2 on

Troubled Yes Bank's asset quality woes seem to be far from over, as the private sector lender reported a Rs 629 crore loss for September quarter on a one time tax impact. This is the third successive quarter after the forced removal of promoter-chief executive Rana Kapoor that the lender has showed difficulties on the bottomline.

Kapoor had to be replaced because of concerns on corporate governance and loan practices and was succeeded by Ravneet Gill. The bank said it had to take a Rs 709 crore impact due on account of deferred tax adjustment necessitated by a shift in tax computation to a newer methodology and stressed that it would have been in black but for it.

However, the gross non-performing assets of the bank were at 7.39 per cent of the book despite a 7 per cent reduction in the loanbook, on the back of Rs 5,950 crore in fresh slippages, as against 5.01 per cent in June and 1.60 per cent in last September. The bank said the recognition cycle for bad loans is "nearing an end" and pointed out that its exposure to the troubled sectors including electricity and shadow banks have gone down by Rs 2,300 crore and Rs 1,750 crore, respectively.

The overall provisions came down to Rs 1,333 crore as against Rs 1,784 crore in the preceding quarter, but were still up from the Rs 939 crore in the year-ago period. The loanbook, which points to a consolidation strategy adopted by the new management, grew only on the retail front which now constitutes 20 per cent of the book, but the loans to corporates and small businesses were down.

The core net interest income was at Rs 2,190 crore, lower by 4 per cent when compared with the preceding quarter due to a shrinkage of the loanbook, high NPAs and also a compression in the net interest margins to 2.7 per cent from 3.3 per cent in the year-ago period. The bank said the fresh slippages alone had a Rs 200 crore impact on the net interest income, as the quantum of interest delivering assets went down.

The non-interest income also declined to Rs 950 crore from the year-ago's Rs 1,300 crore. Despite the difficulties on the operations front, the bank added 2,466 employees during the reporting quarter and the total headcount now stands at 24,211 people.

This is the second quarter since listing when the bank has been in the red. The first was the immediate quarter after Gill took charge. Immediately on taking charge, he had set aside an additional Rs 2,500 crore as provisions for over Rs 10,000 crore of loan portfolio which was marked out as potentially stressed. The stress on asset quality has continued since.

Gill has done a near-complete overhaul of the top management team and also created new positions such as the chief operating officer, and dedicated staff on the risk and governance side, where its performance was found wanting. The bank disclosed that it had conducted an audit of its portfolio from the over Rs 1,500 crore of green bonds raised in three tranches by a third party, which has not found any adverse remarks.

Courtesy the over USD 230 million fund infusion during the quarter, the common equity tier-I capital went up to 8.7 per cent as on September 2019. There were no details shared by the bank on the USD 1.2 billion fund infusion proposal received by it, disclosure of which had led to a 25 per cent jump in the share price on Thursday.

The stock of Yes Bank closed at Rs 66.6, down 5.46 per cent on BSE on Friday as against a 0.09 per cent increase in the benchmark..