What investors are worried about is further deterioration in asset quality at a time when corporate India is highly leveraged and earnings are under stress.
The thrust in the September quarter earnings disclosures of Yes Bank Ltd has been to clear the air on asset quality. While the bank’s bad loans ratio has worsened, it reiterated its guidance for credit costs of 50-70 basis points this fiscal year. A basis point is one-hundredth of a percentage point.
In the September quarter, the bank’s gross non-performing loans increased by Rs.123 crore. Its bad loans ratio rose to 0.61% compared with 0.46% at the end of the June quarter. Provision coverage ratio decreased 3.3 percentage points since the last quarter to 67.7%. With restructured loans amounting to another 0.71%, overall stressed assets stand at 1.32% of advances. That number is still among the best in the industry.
