Shares of Yes Bank hit a 52-week low of Rs 11.89, down 1 per cent on the BSE in intra-day trade on Thursday in an otherwise firm market. The stock of the private sector lender was trading at its lowest level since August 3, 2020. Thus far in the calendar year 2021, the market price of Yes Bank has slipped 33 per cent, compared to a 14.6 per cent rally in the S&P BSE Sensex. It had hit a 52-week high of Rs 20.83 on December 11, 2020.
After a heavy loss in the January-March quarter of the financial year 2020-21 (Q4FY21), Yes Bank returned to profitability in the April-June quarter of the financial year 2021-22 (Q1FY22) with a profit of Rs 210 crore, mainly led by higher other income and lower provisions. Gross non-performing assets (NPA) ratio was up 20 basis points quarter-on-quarter (QoQ) at 15.6 per cent as the bank resorted to heavy restructuring (Rs 5,000 crore; 3 per cent of loans vs. 0.7 per cent in Q4).
Its net interest income (NII) fell by 26.5 per cent in Q1FY22 to Rs 1,402 crore from Rs 1,908 crore in Q1FY21. In April-June 2021, the moratorium was in force and bank booked interest income, which was reversed in the fourth quarter (Q4FY21). Sequentially, NII was up by 42.1 per cent from Rs 987 crore in Q4FY21. Net interest margin (NIM) for the reporting quarter declined to 2.1per cent for Q1FY22 from three per cent for Q1FY21. However, sequentially, NIM rose from 1.6 per cent in Q4FY21.
Analysts at Emkay Global Financial Services expect the bank’s RoA trajectory to remain sub-par at 0.5-0.8 per cent over FY23-24E vs. management expectation of 1-1.5 per cent. “We retain Sell with a target price of Rs 10 (0.9x Sep’23E ABV) amid persistent concerns over its asset quality, sub-par return ratios, and unfavourable risk-reward ratio with higher valuations. Although the current management with regulatory/investor support has been able to avert bank failure, we believe that reorienting Yes Bank to a sustainable retail bank will require differentiated private banking management,” the brokerage firm said result update.
Meanwhile, on March 13, 2020, the government notified the “Yes Bank Ltd. Reconstruction Scheme, 2020” (Scheme). As per the Scheme, authorised capital has been increased from Rs 1,100 crore to Rs 6,200 crore. The State Bank of India (SBI) and other investors invested in the Bank at a price of Rs 10 per equity share (Rs 2 face value with an Rs 8 premium).
As per the scheme, SBI is required to hold up to 49 per cent, with a minimum holding of 26 per cent by SBI in the bank (which is subject to a 3-year lock-in). Other investors are subject to a 3-year lock-in for 75 per cent of the investments they make in the bank under this scheme. Existing investors (other than investors holding less than 100 shares) in YES Bank are also subject to a lock-in for 75 per cent of their holding as per this scheme.
At 12:18 pm, Yes Bank was trading 0.08 per cent lower at Rs 11.97 on the BSE, against a 0.36 per cent rise in the S&P BSE Sensex. A combined 53.63 million equity shares had changed hands on the counter on the NSE and BSE.