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Shares of YES Bank surged 10.6 per cent to Rs 16.25 per share, hitting 52-week high in an otherwise weak market, after ratings agency CARE Ratings upgraded infrastructure, lower tier-2, and upper tier-2 bonds to positive. In comparison, S&P BSE Sensex was down 0.78 per cent at 59, 146 points as of 11:00 am. YES Bank’s stock price has zoomed over 22 per cent in the past five trading sessions. With today’s gains, the shares have climbed over 49 per cent so far this April as against 1 per cent gain in BSE S&P Sensex.
The ratings agency upgraded the outlook to ‘positive’ on account of stable growth in deposits and advances. “After witnessing significant reduction in the deposit base during FY20, the bank has seen 55 per cent increase in the deposits to Rs 1,62,947 crore as on March 31, 2021 as compared to Rs.1,05,364 crore as on March 31, 2020,” said CARE ratings in a report. CASA deposits of the bank have also increased by 52 per cent during FY21 to Rs 42,587 crore as on March 31, 2021. READ FULL PRESS RELEASE HERE
Highlighting the rationale behind the action in ratings upgrade, CARE Ratings factored improvement in capitalization level required to absorb asset quality shocks and provide growth capital. “The ratings also factor in the steady growth in deposit base witnessed by the bank, the shift towards retail lending and granularization of advances profile and improvement in liquidity profile of the bank,” added the ratings agency.
Earlier, the private sector lender also reported expansion in loan book portfolio by 8.8 per cent to Rs 1.81 trillion in FY22. According to Reserve Bank of India data, loans of scheduled commercial banks increased by 8.5 per cent on a year-on-year basis till March 11, 2022, a pace higher than 6.5 per cent a year ago in FY21. READ REPORT HERE
However, asset quality continues to remain under pressure due to moderate recovery in retail slippages and corporate non-performing assets (NPAs) due to Covid-19.
The bank reported gross NPA ratio of 15.41 per cent on March 31, 2021 versus 16.80 per cent two years ago. On the other hand, the net NPA ratio climbed to 5.88 per cent on March 31, 2021 versus 5.03 per cent on March 2020. “While the bank has been making provisions to increase its provision coverage to elevate credit costs and maintain profitability, it expects recovery to be higher than the expected slippages in the near term,” said the ratings agency.
YES Bank is a private sector bank incorporated in November 2003. The bank raised Rs 15,000 crore from institutional investors in July 2020 that led to improvement in capitalization levels. The number of branches stood at 1,094 with 1,221 ATMs, CRMs, and BNA respectively as on December 31, 2021.
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