YES Bank under-reported ~6,355-cr NPAs in FY17

While private sector lender YES Bank saw a 25 per cent rise in net profit, backed by growth in net interest income and fees, it saw a rise in non-performing assets (NPAs) by ~6,355 crore as the Reserve Bank of India (RBI) asked it to restate bad loan figures for FY17. Net profit for the July-September period rose by 25.1 per cent to ~1,002 crore from ~965 crore in the year-ago quarter. The asset quality numbers worsened significantly on the RBI’s assessment of the lender’s numbers for FY17.

While private sector lender YES Bank saw a 25 per cent rise in net profit, backed by growth in net interest income and fees, it saw a rise in non-performing assets (NPAs) by ~6,355 crore as the Reserve Bank of India (RBI) asked it to restate bad loan figures for FY17.

Net profit for the September quarter (Q2 of FY18) rose by 25.1 per cent to ~1,002 crore from ~965 crore in the year-ago quarter. The asset quality numbers worsened significantly on the RBI’s assessment of the lender’s numbers for FY17. According to rules, if the RBI’s assessment of bad debt numbers for a financial year differs from the bank’s assessment by more than 15 per cent, the divergence should be disclosed. The bank saw a divergence of ~6,355 crore in gross NPAs in FY17. After factoring in the divergence in provisioning, the adjusted (notional) net profit for FY17 stood at ~2,316 crore. According to its FY17 results, YES Bank’s net profit was ~3,330 crore.

This is second time the lender has had to restate its gross NPAs on a missive from the banking regulator. It had understated bad loans by ~4,176 crore in FY16.

Besides YES Bank, two other private lenders — Axis Bank and Lakshmi Vilas Bank — had to rework bad loan numbers for FY17 and make provisions.

YES Bank’s gross NPA ratio as of September 2017 stood at 1.82 per cent against 0.83 per cent as of September 2016.

Rana Kapoor, its managing director and chief executive officer, said the divergence constituted 19 accounts, belonging to seven groups, mainly infrastructure-related. Of these, 12 were upgraded in October as they “demonstrated no overdue and made standard payments”, three have been sold and four accounts remain NPAs.

The total impact of the divergence stands at ~1,434.5 crore in the current quarter.

“There was very limited time between the review of FY16 and the commencement and the closure of the review for FY17. There has not enough curing time for the system,” Kapoor said.

The bank currently has a total exposure of ~1,434 crore with the National Company Law Tribunal (NCLT) with two accounts from the first list and seven accounts from the second list. Its net interest income for Q2 rose by 33.5 per cent to ~18,885 crore. Other income, which includes fees and commissions rose by 35.4 per cent to ~1,248 crore.

Total deposits for the quarter rose by 23.4 per cent to ~1,57,989 crore with current and savings accounts ratio at 37.2 per cent. Total advances grew by 34.9 per cent to ~1,48,675 crore as of September 30, 2017.

The bank’s total capital adequacy ratio (CAR) was at 17.8 per cent and Tier-I CAR was at 13.2 per cent as of September 30. The lender raised capital of ~6,915 crore through Tier-I and Tier-II bonds. Kapoor said the lender

Had “no visible need to raise capital for a couple of years”.

Vijaya Bank net rises 20% at ~185.46 crore Vijaya Bank on Thursday reported 20 per cent increase in net profit at ~185.46 crore for the quarter ended September 30 (Q2), helped by lower expenses, a PTI report said. The public sector bank had registered a net profit of ~154.55 crore in the corresponding quarter of FY17.

Total income for Q2 fell marginally to ~3,501.31 crore from ~3,516.57 crore a year ago, the bank said in a regulatory filing. Total expenditure went down 6.05 per cent to ~2,767.35 crore for Q2 from ~2,945.7 crore in the year- ago period.

The lender’s gross non-performing assets (NPAs) dipped slightly to 7.06 per cent of the gross advances as of September 30, from a level of 7.07 per cent a year ago. Likewise, net NPAs or bad loans were trimmed to 4.86 per cent as a percentage of net loans by September 30 from 5.1 per cent earlier. Shares of Vijaya Bank were trading 0.08 per cent lower at ~66 on the BSE.

L&T Finance posts 45% increase in profit L&T Finance Holdings on Thursday said its consolidated profit increased to ~360 crore for the quarter ended September 2017 (Q2), registering a growth of 45 per cent year-on-year, PTI reported. This growth in profit after tax has been achieved after taking accelerated credit cost of ~277 crore, the company said in a regulatory filing. The company had posted a profit of ~248 crore in Q2 of FY17. Its gross non-performing assets (NPAs) increased marginally to 5.8 per cent of gross advances in Q2, compared with 5.71 per cent in the year-ago period. Net NPAs stood flat at 3.31 per cent on a yearly basis.

The company’s shares last traded at ~196.45 apiece on the BSE, up 0.10 per cent over Wednesday’s close.