Most analysts see YES Bank in red in Q3 on upfront provisioning

NEW DELHI:

Upfront provisioning for stressed loans is likely to weigh on YES Bank's earnings for Oct-Dec, most brokerages said.

"We expect asset quality ratios to see further deterioration (lumpy corporate exposure). We are building slippages of 9-10% (subject to court ruling). Commentary from the management on progress of 'below investment grade' and recovery from existing bad loans would be the key monitorable," Kotak Institutional Equities said.

Three out of four brokerages estimate a loss for the bank during the quarter. Kotak Equities expect the bank to report a net loss of 6.3 bln rupees, Axis Capital expects a net loss of 12.6 bln rupees and ICICI Securities sees a loss of nearly 2.0 bln rupees for the quarter.

However, Nirmal Bang Equities expects the lender to report a net profit of 3.8 bln rupees. The bank will detail its quarterly earnings on Friday. In Jul-Sep, the bank reported a net profit of 1.3 bln rupees, against a loss of 6.0 bln rupees a year ago.

"Operating profit in H1FY21 (Apr-Sep) was primarily being utilised towards provisioning and for this quarter we are yet to see, if incremental stress calls for higher provisioning or buffer will be utilised. Credit cost should range between 3.0-3.5%," ICICI Securities said.