YES Bank dipped 10% to Rs 299 on the BSE in early morning trade after the private sector lender saw significant weakening of its asset quality in September 2017 quarter (Q2FY18).
The bank’s gross non-performing assets (GNPA) ratio rose to 1.82% in Q2FY18 from 0.97% in June quarter (Q1FY18), while Net NPA rose to 1.04% from 0.39% in previous quarter. It saw a rise in NPAs by Rs 6,355 crore as the Reserve Bank of India (RBI) asked it to restate bad loan figures for FY17.
However, Yes Bank posted a strong operating performance with a 25% year on year (YoY) rise in net profit at Rs 1,002 crore, backed by growth in net interest income and fees. Its net interest income (NII) grew by 33.5% YoY to Rs 1,885 crore driven by robust 34.9% YoY increase in advances and strong expansion 30 BPS YoY (flat sequentially) in net interest margin (NIM) which was at 3.70%.
While the business growth of Yes Bank continues to be enthusing, the brokerage firm Sharekhan believes that the markets and investors will be worried over the large divergence amount reported by the bank.
“Notwithstanding the fact that in past, the bank management have been fairly successful in ring-fencing, enforcing collaterals and effect recovery in GNPA assets, we believe, that the recent developments raise concerns which will weigh heavy on the stock performance in the near term,” the brokerage firm said in stock update.
At 09:45 AM; the stock was down 6.5% to Rs 310 on the BSE, as compared to 0.13% rise in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined 32.16 million shares changed hands on the BSE and NSE so far.
In past seven trading days, YES Bank has dipped 20% from Rs 373 on October 17, 2017, against 1.8% rise in the benchmark index.