Yes Bank sees retail stress build up due to second wave
- As compared to the previous quarter (January-March), the bank’s retail gross non-performing assets (NPA) ratio rose 40 basis points (bps) to 3.3% of retail assets.
Like its peers, private sector lender Yes Bank also suffered a deterioration in the asset quality of its retail loans in the June quarter, reflecting the shock impact of the second Covid-19 wave on income streams of small borrowers.
As compared to the previous quarter (January-March), the bank’s retail gross non-performing assets (NPA) ratio rose 40 basis points (bps) to 3.3% of retail assets. That apart, retail loans that were overdue between 61-90 days rose to ₹790 crore in the June quarter, from ₹234 crore in the March quarter and ₹513 crore a year ago. Loans turn non-performing if repayments are not made within 90 days of the due date.
The bank added ₹760 crore of bad loans in the retail segment, recovered and upgraded ₹224 crore, and wrote off ₹344 crore of individual loans in Q1 FY22.
“This is quite understandable because of the kind of impact the pandemic had on the entire nation during April and May when the foremost thing was how to save lives. This and the lockdowns have definitely impacted the earning capacity,” said Prashant Kumar, chief executive of Yes Bank.
However, Kumar said an improvement in the economic environment has led to an improvement in the lender’s collection efficiency.
“We are expecting that these accounts would not turn into NPAs as collection efficiencies are improving. This is a one-off thing,” said Kumar.
“The months of June and July have seen an uptick in high frequency indicators and business momentum is picking up. Businesses are adjusting to the new normal with reduced economic impact,” said Kumar.