Shares of private sector lender Yes Bank surged almost 31% to ₹221 on Thursday — a day after the bank reported that the Reserve Bank of India’s annual inspection report did not find any divergence in provisioning or in bad loans, compared with what the bank had reported for the financial year 2017-18.
According to RBI norms, banks have to disclose divergences if the additional provision requirement exceeds 15% of the net profit and/or additional gross NPAs identified by RBI exceed 15% of the published gross NPAs for the reference period.
On Thursday, Yes Bank was the top gainer in the A group of stocks on the BSE. Its shares gained 30.73%, or ₹51.95, to close at ₹221.
Bank clears the air
“This development comes after months of speculation on the magnitude of divergence that the bank was expected to report, particularly after its MD and CEO was forced to step down by the RBI,” brokerage firm Motilal Oswal said in a report, adding that clarity in this regard would help the bank clear the air on one of the key overhangs and start a fresh journey under the new MD and CEO, Ravneet Gill.
However, Yes Bank shares are currently down nearly 39%, or ₹141, compared with the August 30 close of ₹361.90. Shares have been falling sharply since September after the RBI decided not to extend MD and CEO Rana Kapoor’s term for three years as endorsed by the board. For the fiscal 2016-17, the bank had reported gross NPAs of ₹2,018.6 crore against RBI’s assessment of ₹8,373.8 crore in the same period.
According to the Motilal Oswal report, with the two key overhangs addressed, - management and divergence - worst for the bank appears to be behind and a further recovery in the stock price is expected.
