Private sector lender Yes Bank has an overall stressed advance of 8 percent and new chief executive Ravneet Gill’s clean-up will keep profit under pressure for up to the next 18 months, ratings agency Moody’s warned on Tuesday.
However, looking beyond the near-term stress, Gill’s clean-up is positive, once the de-risking is completed, the agency noted.
“We estimate that Yes Bank’s overall stressed assets are about 8 percent of its total loans, taking into account this new disclosure,” Moody’s said after the bank Friday reported its maiden loss of Rs 1,506 crore for March quarter.
Gross non-performing assets shot up to 3.2 percent, while Gill also marked out a Rs 10,000-crore portfolio as potentially stressed.
Provisions on account of higher NPAs and also a contingent provision representing 20 percent of the Rs 10,000 -crore portfolio resulted in the losses, Gill explained.
The agency said the bank expects 50 percent of these potentially stressed loans to slip into NPAs and will provide more for the same going forward.
The 8 percent dud loans include a gross NPAs of 4 percent which has been called out as potentially stressed, net standard restructured loans and security receipts of 0.8 percent of gross loans, the agency said.