After adding Rs 23,000 crore to its gross non-performing assets (NPAs) in the December quarter, ailing YES Bank now says it hopes to contain this slippage to around Rs 8,500 crore in the coming financial year (which begins April 1).
Its standard advances after subtracting net NPAs were about Rs 1.75 trillion at end-December. Advances were Rs 1.86 trillion and net NPAs at Rs 11,114 crore.
The slippage ratio (standard advances becoming NPAs) will be brought to 5 per cent in 2020-21, from 11.98 per cent in the December quarter, according to a presentation for analysts. The vulnerable portfolio, loans that have high chance to slip into NPAs, is Rs 13,911 crore at end of December 2019. These are special mention accounts (SMA) categorised in terms of duration. In the case of SMA -1, the overdue period is between 31 and 60 days. An overdue between 61 to 90 days will make an asset SMA -2.
Gross NPAs at end-December were Rs 40,709 crore, up from Rs 5,159 crore a year before (and Rs 17,134 crore at end-September 2019). With the huge provisioning for bad loans, the bank posted a loss of Rs 18,564 crore in the December quarter.
Provisioning for NPAs and write-offs rose about 10-fold to Rs 22,238 crore in that quarter, from Rs 2,214 crore in the earlier one. It had provided Rs 507 crore on this account in the December quarter of 2018-19.
The Provision Coverage Ratio (PCR) increased to 72.7 per cent for the December quarter, from 43.1 per cent in the September quarter. The higher PCR would enhance the ability to offload these assets from the balance sheet, to further release capital, YES Bank stated in the presentation.
While determining NPAs and related provisioning requirements for October-December, it considered slippage in NPAs after this date till that of the publication of financial results (March 2020), it said. This change resulted in recognition of additional loans of Rs 5,150 crore as NPAs and related provisioning requirement of Rs 772 crore for the quarter.
Additionally, considering the economic environment and significant increase in NPAs, the Bank decided to enhance its PCR on bad loans over and above the Reserve Bank-mandated requirement. As a result, additional provisioning of Rs 15,422 crore for the quarter, it said.