November 1, 2019 / 12:12 PM / 18 days ago

India's Yes Bank posts quarterly loss as asset quality worsens

BENGALURU, Nov 1 (Reuters) - Private-sector lender Yes Bank Ltd reported a bigger-than-expected loss for the second quarter on Friday, as its asset quality worsened and provisions swelled.

The results mark Mumbai-based Yes Bank’s fifth straight quarter of weak earnings as the lender struggles to recover from an ongoing credit squeeze in the Indian economy as well as a pile of bad loans.

Net loss for the three months to Sept. 30 came in at 6 billion rupees ($84.73 million), compared with a profit of 9.65 billion rupees a year ago. Analysts were expecting a loss of 3.10 billion rupees, according to Refinitiv data.

Net interest income fell 9.6% to 21.86 billion rupees, while net interest margin, a key indicator of a bank’s profitability, declined to 2.7% from 3.3%.

The results were also hurt by a one-time deferred tax asset adjustment of 7.09 billion rupees related to the bank's shift to India's new corporate tax structure, Yes Bank said here

Chief Executive Officer Ravneet Gill, who took charge in March, last month warned that the credit squeeze in the economy had hurt the bank’s asset quality, which was already hammered by exposure to troubled infrastructure, aviation and housing finance companies.

Gross bad loans as a percentage of total loans rose to 7.39% as of September-end from 5.01% in the previous quarter. It was 1.60% a year ago.

Pressed for capital, the bank has been in talks with investors. It said on Thursday it had received a binding offer of $1.2 billion from a global investor without giving further details.

Yes Bank has also received multiple other non-binding but “strong” bids from marquee domestic and global institutional investors and family offices, it said on Friday.

Common equity tier 1 ratio, a measure of a bank’s capital strength, stood at 8.7% at the end of the September quarter. Provisions for the quarter jumped 42.2% to 13.36 billion rupees.

Shares of the bank closed down 5.4% ahead of the results, and are down 63.4% year-to-date. ($1 = 70.8160 Indian rupees) (Reporting by Chris Thomas in Bengaluru; Editing by Subhranshu Sahu)

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