Yes Bank shares tank 10% as gross NPAs double; brokerages cut target price

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Updated: October 27, 2017 4:51:54 PM

A day after Yes Bank reported a divergence in gross bad loans for FY17 even as its gross bad loans have doubled, global brokerages turned cautious and maintained either sell or neutral rating.

Yes Bank, Yes Bank NPAs assessment, RBI raiting, Reserve Bank of India, Gross NPAs of yes bankThe lender reported an increase in NPAs for the quarter after the RBI directed it to reclassify more assets as NPAs as on March 31. (Image: PTI)

A day after Yes Bank reported a divergence in gross bad loans for FY17 even as its gross bad loans have doubled, global brokerages turned cautious and maintained either sell or neutral rating, with cutting the target price by about Rs 10. The share of Yes Bank also fell as much as 10% in the morning trade on Friday, its lowest since July to Rs. 299 on BSE and Rs. 298.55 on NSE. However, the shares recovered later in the day and closed 7.39% down at Rs 307.20 and Rs 307.70 on BSE and NSE respectively.

Morgan Stanley warned that the bank may be staring at weak near-term performance due to non-performing assets. Jefferies, Credit Suisse and CLSA have also cut target price of bank’s shares. Credit Suisse cut its 12-month target price from Rs 331 to Rs 321. The bank announced a divergence in gross bad loans of Rs 6,355 for the financial year 2016-2017. Divergence is the difference between Reserve Bank of India’s inspection report and banks own report.

The banks Q2 profit rose 25%, but its bad loans ratio jumped to 1.82% at the quarter ended September from 0.97% a quarter earlier. The bank reported that its bad loans situation witnessed a deterioration as the gross NPA grew to Rs 2,720.34 crore (1.82%) during the second quarter of the current financial year from Rs 916.68 crore (0.83%) in the corresponding period last year.

The bank reported a net profit of Rs 1,002.73 crore in the second quarter of the fiscal. Its net profit was at Rs 801.54 crore in the same quarter a year ago. In a regulatory filing, it said the Net Interest Income increased to Rs 1,885.1 crore in the July quarter of the fiscal.

The 33.5% increase in NII was driven by “steady growth in advances and CASA and expanding margins”, it said. The lender reported a total income of Rs 6,048.78 crore as against Rs 4,982.23 crore during the second quarter of the last financial year. The banks operating profit was Rs 1,906.7 crore for the second quarter of 2017-18, showing y-o-y growth of 37.6%.

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