Q3 Results: Yes Bank Reports Rs 18,564 Crore Loss In The Third Quarter

Yes Bank reports Rs 18,564 crore loss in Q3

An information notice indicates that automated teller machines (ATM) are out of cash at a Yes Bank Ltd. branch in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)
An information notice indicates that automated teller machines (ATM) are out of cash at a Yes Bank Ltd. branch in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Private sector lender Yes Bank Ltd. reported its largest ever quarterly loss in October-December quarter as it saw a surge in bad loans. The increased provisions needed to cover for the loans depleted the bank's capital.

For the quarter ended December 2019, Yes Bank reported a loss of Rs 18,564 crore compared to a profit of Rs 1001 crore in the same quarter last year. In the preceding quarter, Yes Bank had reported a net loss of Rs 600 crore.

The bank’s net loss would have been wider at Rs 24,778 crore in the third quarter, if it weren’t for a tax write back of Rs 6,214 crore.

The bank reported a surge in bad loans which led to a jump in provisions that need to set aside against the soured debt.

Gross non-performing assets rose to Rs 40,709.20 crore, or 18.87 percent of the bank’s total loan book. At the end of the September quarter, bad loans stood at 7.39 percent of the loan book. The bank’s net NPA rose to Rs 11,114 crore, or 5.97 percent of net advances, from Rs 9,757.20 crore in the September quarter.

Yes Bank set aside Rs 24,765.73 crore in provisions during Q3, which led to a depletion of its capital.

The capital base--specifically the Core Equity Tier-1 ratio--fell to 0.6 percent at the end of the quarter compared to 8.7 percent in the September quarter. The minimum regulatory requirement stands at 7.375 percent. Overall capital adequacy ratio dropped to 4.2 percent from 16.3 percent in the preceding quarter.

It’s statutory liquidity ratio has breached the RBI’s minimum requirement and so has its liquidity coverage ratio. The bank has thus provided Rs 86 crore as penalty to the central bank.

Deposit Outflows

As on Dec. 31, 2019, the bank’s outstanding deposit base stood reduced to 1.65 lakh crore from Rs 2.09 lakh crore on Sep. 30, 2019. The lender continues to see an outflow of deposits since Dec. 31; its total deposits stood at Rs 1.37 lakh crore, as on Mar. 5.

The outflow of deposits was most marked in the savings account segment, where typically low value deposits are kept with the bank. As on December 31, savings account deposits dropped to Rs 29,764 crore from Rs 44,579 crore a year ago. Similarly, term deposits fell to Rs 1.12 lakh crore at the end of the third quarter, from Rs 1.48 lakh crore last year.

Advances came down to Rs 1.86 lakh crore vs Rs 2.24 lakh crore in September. Domestic corporate advances fell to Rs 90,695 crore as on December 31, from Rs 1.46 lakh crore a year ago. Retail advances increased to Rs 41,289 crore from Rs 37,117 crore in the same period.

AT-1 Bonds

In a separate disclosure made to exchanges, Yes Bank said that the additional tier-1 bonds issued by the lender would need to be written down since the bank has reached the ‘point of non viability’ trigger. As per Basel rules which govern these instruments, AT-1 bonds are loss absorbing capital instruments and should be written down when a bank breaches certain thresholds of core equity tier-1 capital.

In its release, the bank said that since a scheme of reconstruction is being proposed under Section 45 of the Banking Regulation Act, 1949 “the Bank is deemed to be non-viable or approaching non-viability and accordingly, the triggers for a write-down of certain Basel III additional tier 1 Bonds("AT 1 Bonds") issued by the Bank has been triggered.”

The bank has Rs 8,415 crore in such bonds outstanding.

Such AT 1 Bonds would need to be fully written down permanently before any reconstruction of the Bank is undertaken, the lender said.


In its Q3 results announcement, Yes Bank said that it had become aware of the bank’s operations, potential conflict of interest by former MD & CEO Rana Kapoor and potential misclassification of bad loans in September 2018 through stock exchange communication and anonymous whistleblower complaints.

Yes Bank conducted an internal investigation into the complaints, which resulted in a report in November 2018, the lender said in its notes to the Q3 results.

Yes Bank Reconstruction Scheme Locks In 75% Of All Shareholding For Three Years

In December 2018, the bank then appointed an independent law firm to look into the findings of the internal investigations. The final report of this external inquiry was received in March 2020 and the bank is in the process of evaluating these findings and whether it has any material impact on the financial results.

Meanwhile, the Enforcement Directorate and the Central Bureau of Investigation have already launched investigations into dealings between Kapoor and some of Yes Bank’s borrowers. Kapoor has been placed under ED’s custody till March 16.

New Investors

The earnings release comes about a week after the Reserve Bank of India placed Yes Bank under a moratorium and initiated a scheme of reconstruction. As part of the rescue, State Bank of India was permitted to hold up to 49 percent stake in Yes Bank.

On Thursday, SBI informed exchanges on Thursday that its board has approved the purchase of 725 crore equity shares of Yes Bank at Rs 10 each, adding up to an investment of Rs 7,250 crore. According to Yes Bank’s release on Saturday, SBI will invest Rs 6,050 crore.

Private sector lenders Axis Bank Ltd., ICICI Bank Ltd. Kotak Mahindra Bank, Bandhan Bank and Federal Bank as well as housing finance company Housing Development Finance Corporation Ltd. have also approved investments in Yes Bank.

Both HDFC and ICICI Bank will invest Rs 1,000 crore each in the troubled lender while Axis Bank will invest Rs 600 crore and Kotak Mahindra Bank will invest Rs 500 crore. Bandhan Bank and Federal Bank will invest Rs 300 crore each.

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The government notified Yes Bank’s scheme of reconstruction on Friday. The RBI-advised moratorium applied on Yes Bank is expected to lift by March 18.