YES Bank to transfer Rs 48,000 cr stressed loans to JC Flowers by end Nov

Lender said in July gross NPA ratio would dip below 2% after transfer to asset reconstruction company

YES Bank will transfer Rs 48,000 crore of stressed loans to asset reconstruction company JC Flowers by the end of November, said Prashant Kumar, the private lender’s managing director and chief executive officer.

Kumar was speaking at the sidelines of a banking event in Mumbai.

YES Bank said in September its board had approved the sale of stressed loans worth Rs 48,000 crore to JC Flowers Asset Reconstruction, after receiving no bids to challenge that made by the private equity company.

Consequently, YES Bank’s board of directors approved JC Flowers’ declaration as the winner of the Swiss Challenge method used for the sale of the stressed assets.

After the signing of the binding term sheet by YES Bank with JC Flowers ARC LLC and JC Flowers ARC for a strategic partnership related to the sale of the stressed loan portfolio, the lender’s board also approved the investment needed to buy up to 19.99 per cent equity stake in the private equity firm. The purchase can be made in single or multiple tranches, subject to regulatory approval.

Following the transfer of gross non-performing assets (NPA)—a bulk emanating from corporate loans—YES Bank’s gross NPA ratio would dip below 2 per cent, Kumar said in July.

In July-September, the private bank’s net profit declined by 32.2 per cent year-on-year (YoY) to Rs 153 crore largely due to ageing related provisioning requirements. The bank had posted a net profit of Rs 225 crore in the quarter year ago (Q2FY22).

The bank’s asset quality profile improved with gross NPA at 12.9 per cent till as on September 30, 2022, compared with 15 per cent a year ago. The bank's net NPAs dipped to 3.6 per cent from 5.5 per cent.

Its provisions, including for stressed assets, rose 54.4 per cent YoY to Rs 583 crore in Q2FY23. The provision coverage ratio rose to 84 per cent for the quarter under review from 78.9 per cent a year ago.