Yes Bank Surprised Investors by Posting Profit of Rs 2629 Cr in Q4

Whatever happened in the last few months with Yes Bank, people have kept low expectations from the perspective of financial performance from the bank. But Yes Bank has surprised everyone by registering a profit of Rs 2,629 crore due to an extraordinary item of write off of T1 bonds.

The bank has a loss of Rs 3,668 in the fourth quarter of the financial year 2020 from ordinary activities. It generated an extraordinary income of Rs 6,297 crore from the write-down of Basel III compliant additional tier I (AT I) Bonds amounting to Rs 8,415 crore.

The bank's deposits have shrunk to Rs 1.05 lakh crore, down 54 per cent compared with Rs 2.27 lakh crore in the year-ago quarter while advances declined 29 per cent year on year to Rs 1.7 lakh crore from Rs 2.4 lakh crore in the year-ago quarter. The capital adequacy ratio under Basel-III fell to 8.5 per cent from 16.5 per cent.

There has been a massive drop in the deposits with savings bank down 60 per cent over last year, current account down 67 per cent and term deposits 49 per cent.

The bank saw further withdrawals of Rs 32,142 crore in eight days of March after the RBI moratorium was lifted.

The Bank's deposit base has seen a reduction from Rs 2,27,610 crore as at March 31, 2019 to Rs 105,364 crore as at March 31, 2020 (Position as at May 2, 2020 Rs 102,717 crore).

The bank's gross non-performing assets (NPAs) spiked to 16.80 per cent from 3.22 per cent a year ago. They were however, better than the December quarter figure of 18.87 per cent.

While further reduction in deposits lost post moratorium may cast material uncertainty, particularly in the current COVID scenario, the Bank under the leadership of new management and Reconstituted Board is confident that it can tide over the current issues successfully. This belief is reinforced by the pedigree of new investors of the Bank (led by State Bank of India and other Financial Institutions).

Further, the bank's management and board of directors have made an assessment of its ability to continue as a going concern based on the projected financial statements for the next 3 years and are satisfied that the proposed capital infusion and the bank's strong customer base and branch network will enable the Bank to continue its business for the foreseeable future, so as to be able to realize its assets and discharge its liabilities in its normal course of business. As such, the financial statements continue to be prepared on a going concern basis.