Yes Bank's head office in Mumbai, India. Photo: Himanshu Bhatt/NurPhoto

India’s Yes Bank has reported an over 60% drop in net profit for the April-June quarter as its asset quality sharply deteriorated. According to its regulatory filing, the cash-strapped bank posted a standalone net profit of 454 million rupees (US$ 6.07 million) for the first quarter ended June 30 as against 1.13 billion rupees in the year ago quarter.

Its gross non-performing assets ratio, as a percentage of gross advances, rose to 17.30% from 5.01% in the year-ago quarter. In the quarter ended March 31, it was 16.80%.

Yes Bank’s net interest income was at 19.08 billion rupees, down 16.8% from 22.81 billion rupees in the year-ago quarter. The total provisions for bad loans and contingencies for the quarter fell to 10.87 billion rupees, consisting of 6.42 billion rupees of Covid-related provisioning. In the same quarter last year, the lender had made provisions of 17.84 billion rupees.

The bank’s deposits at 1.17 trillion ($ 15.63 billion) grew 11.4% quarter-on-quarter, aided by 26.4% growth in current account deposits and 12.6% growth in term deposits. Yes Bank claimed that its intensified client outreach during the quarter resulted in the widening of its customer base.

Yes Bank had recently raised 150 billion rupees ($ 2 billion) through a follow-on public offering by issuing shares at 12 rupees each. The offer got a 95% subscription, driven by institutional investors, while high-net-worth individuals and retail investors showed tepid interest. The qualified institutional buyers’ portion was subscribed 1.4 times, but the segments meant for high-net-worth individuals and retail buyers were subscribed just 63% and 43%, respectively.

In March, the Reserve Bank of India had put Yes Bank under a one-month moratorium following deterioration of its financial position, and it took control of the board. The central bank had put limits on withdrawals during the period.

Later a rescue plan was formulated, wherein a consortium of lenders, led by State Bank of India, picked up 49% equity in the private sector lender. The consortium included several banks and financial institutions – such as ICICI Bank, Axis Bank and mortgage lender Housing Development Finance Corporation. This was the first time state-owned and private-sector lenders were roped in to bail out a stressed private bank.

Yes Bank’s troubles were aggravated after the near-collapse of India’s leading shadow banker IL&FS in 2018. The bank’s exposure to the beleaguered shadow banking sector was large and it led to a steep increase in bad loans.