YES Bank is in recovery mode with investors continuing to repose faith in the private-sector bank.
YES Bank CEO Ravneet Gill has reassured investors that the Bank’s financial and operational performance was sound and stable, and its liquidity position was improving. He also restated the Bank’s commitment to stable asset quality and strengthening of retail business growth.
Describing the July-September 2019 quarter as one of the most promising in YES Bank’s lending history, Gill said the Bank had opened more savings accounts during the period than it had ever before.
Ravneet Gill said, “Our new fixed deposits increased 39% quarter-on-quarter and our overall liabilities were in line with the previous quarter. Our CASA also witnessed over 30% growth compared to Q1. This shows that our depositors and clients continue to have faith in the Bank.”
According to Gill, YES Bank’s business in the last three months has been encouraging and is a reflection of its strong operating model. “We are looking at growth capital as our next step and the three constituencies of investors we are looking at are private equity, strategic and large Indian family offices,” he said, adding, “The Bank is looking at a mix of investors from each of three categories, though the quality of investors and their ability to invest serious money in YES Bank is unquestionable.”
YES Bank is talking to private equity funds and family offices to raise capital. The Bank is highlighting its Q2 performance on key operating parameters to clear any doubts about its ability to overcome operational challenges and boost growth. Each one of these investors, besides the family offices, wants a larger holding, which will ultimately depend on the regulator.
Gill’s remarks came at a time of pronounced weakness in Indian banking stocks, with 10 of the 12 Bank Nifty counters declining. However, he said there was no correlation between the inherent strengths of the Bank and its current market price.
During the July-September quarter, YES Bank’s asset quality stabilised, even though certain resolutions were delayed beyond expectation. In the last six weeks, the Bank has become $300 million heavier than it was before and yet the stock performance has gone in the other direction.
“A company’s operating performance and its share price performance usually goes hand-in-hand, but sometimes when sectors go through stress, as in the case of the financial sector now, you will have the odd instances where the operating performance of a company and the share price are disjointed,” Gill said.
On the issue of YES Bank’s exposure to sensitive sectors such as NBFCs like Indiabulls, Gill assured that there was nothing to worry about and that the conduct of this account had been outstanding.
“We have not had even a day’s delay. Last week, there was a large repayment and it was met on time. Over the last two quarters, we have reduced exposure to Indiabulls by 30% and even this is against more than sufficient collateral,” Gill noted.
In the last two-quarters of FY20, YES Bank has reduced the balance sheet and reallocated its exposure on wholesale banking to retail banking. Besides, the Bank has also witnessed decent growth and has shored up the liability franchise. As a result, the Bank is comfortably above the CET1 threshold and is strongly focusing on capital conservation and stabilizing asset quality.
“The important message is that capital for us is for growth and not for existence. It is completely growth and transformational. We will not compromise on asset quality or capital conservation in our quest for growth. The Bank will continue to create capital organically for the foreseeable future. In short, there is nothing that stops us from doing this going forward,” Ravneet Gill added.