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Recovering Fortunes: Yes Bank sees signs of reaching pre-Covid levels soon

Private lender Yes Bank has witnessed internal as well as external indicators of fast-paced economic recovery leading to pre-Covid operational levels.

The bank’s own financial performance has improved drastically. It has again reported a net profit for the third consecutive quarter.

Apart from q high retail loan disbursement demand, the bank has also witnessed a brisk recovery of bad loans.

In fact, 60 percent of the Rs 5,000 crore target of recovery till March 2021 has already been completed.

Besides, the bank has added about 85,000 new retail accounts per month. It plans to scale this number up to 100,000 by the end of the current fiscal.

The logic for its retail push, says Yes Bank’s Managing Director and Chief Executive Prashant Kumar, is the growth seen in lending to small businesses and individuals.

Furthermore, the strategy increases the base of the bank and instills further confidence in the lender.

According to Kumar, growth has been seen in loan disbursement for the purchase of construction equipment, automobiles, and commercial vehicles amongst others.

This rise led the bank to report a net profit of Rs 151 crore for the quarter ended December 31.

During the corresponding quarter of the previous financial year (2019-20), the bank had reported a loss of Rs 18,560 crore.

The net interest income of the restructured bank increased by 29.7 percent on a quarter-on-quarter basis to Rs 2,560 crore.

In terms of his short-term outlook, Kumar, who has been credited with the turnaround of the bank which was placed under moratorium in 2020, pointed out four key areas that have vastly improved.

“On the overall economy, the key indicators like GST collections and E-way bills have risen. This shows that economic activity is catching pace,” he said.

“Within the bank as well, we are seeing improvements in key areas like the demand for loans, collection efficiency which has reached 96 percent… the pre-Covid level was at 97 percent.”

“The ‘Check Bounce Rate’ has also come down from 19 percent to 9 percent, the normal parameter here is of 7-8 percent. So these indicators show ‘good times’ to come for the overall economy and for the bank.”

On the hike in Covid-19 related provisioning, Kumar said that Bank has prepared itself in case of a revision in NPA recognition norms.

“We are well capitalized, 13 percent over the CET norms. Not just us but others would also have to recognize their NPAs as and when the norms get revised.”

Currently, a time frame of 90 days is given for recognition of an asset as an NPA.

The bank has stepped up provisioning of Rs 2,935 crore, consisting of additional Rs 765 crore towards Covid-19 related provisioning and the balance majorly towards increasing ‘PCR’ of both ‘NPA and NPI’.

As of December end, the bank’s gross non-performing asset (GNPA) stood at 15.4 percent, down from 16.9 percent in the previous quarter. Its net NPA was 4 percent against 4.7 percent in the previous quarter.

Last year, a consortium of lenders, led by the State Bank of India had rescued the bank and appointed a new Board along with Kumar, who was earlier the SBI’s Deputy Managing Director and Chief Financial Officer.

At present, the lender has fully paid back the RBI’s special liquidity facility of Rs 50,000 crore.

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