Data | The Yes Bank crisis explained in six charts

The bank was on a loan spree even amidst mounting bad loans

March 08, 2020 10:58 pm | Updated December 03, 2021 06:52 am IST

Anxious wait: Yes Bank depositors standing in a queue to withdraw money in Mumbai.

Anxious wait: Yes Bank depositors standing in a queue to withdraw money in Mumbai.

The government had recently put private sector lender Yes Bank under moratorium till April 3 and capped deposit withdrawal at ₹50,000 after severe deterioration of the bank’s financial position.

However, Yes Bank’s books show that warning bells had been ringing for more than a year. The bank went on a loan spree even as bad loans mounted. Meanwhile, depositers withdrew large amounts, resulting in the bank’s profitability nosediving in the last two fiscals.

Loan spree

In the last five years, Yes Bank went on a loaning spree. Its total advances rose by 334% between FY14 and FY19, the highest rise among comparable banks in the period.

Percentage change of total advances

image/svg+xmlBankFY14 toFY19 (%)Yes Bank334HDFC170ICICI73Axis115Kotak288SBI81
 

Also read: Explained | Why did Yes Bank have to be bailed out?

Bad loans multiply

Many borrowers started defaulting. The bank’s Gross NPA% (loans overdue for >90 days) zoomed to 7.39% as of Sept. ‘19, the highest among comparable banks.

Gross NPA to gross advances ratio

image/svg+xml1210864207.39%201420152016201720182019Q2FY20SBIICICIYesAxisKotakHDFCWhile in FY14, Yes Bank's Gross NPA was thelowest, in Sept. '19 it was the highest
 

Also read: Yes Bank founder Rana Kapoor arrested by Enforcement Directorate

Low provisions

While bad loans piled up, Yes Bank did not make enough provisions in its profits. Its Provision Coverage Ratio in FY19 was 43.1%, the lowest among comparable banks. RBI says a PCR of >70% is desirable.

Provision coverage ratio

image/svg+xmlBankPCR(%)Yes Bank43.1ICICI70.6HDFC71.36Axis Bank77Kotak71.9SBI78.73
 

Confidence drop

Amidst the loan mess, customers withdrew large amounts, resulting in the credit-deposit ratio of Yes Bank crossing 100% (it lent more than what it received) in FY18, 19.

Credit-deposit ratio

image/svg+xml100908070106.1%101.3%201420152016201720182019SBIYesAxisKotakHDFCICICI

A credit-deposit ratio of 106% means a bank loaned ₹106 for every ₹100 it received.

Also read: Editorial | Banking on bailouts: On Yes Bank crisis

Poor profitability

The loan spree & high NPA meant poor profitability, gauged by Yes Bank’s sinking Return on Assets (RoA) (RoA = net income/ total assets). Graph shows year-on-year change in RoA.

For instance, Yes Bank's RoA in FY19 was 0.52, in FY18 it was 1.78. Thus the y-o-y change of -1.26 in FY19 is plotted in the graph.

Return on Assets

image/svg+xml10.50-0.5-1-1.520152016201720182019SBIYesAxisKotakHDFCICICI

Yes Bank’s y-o-y change of RoA sinked to -1.26 in FY19, the highest slump among comparable banks.

Investors sensed trouble

Though the bank’s troubles came as a shock to many, investors sensed it early. The bank’s stock price fell steadily in the past year.

Tumbling stocks

image/svg+xml16.24003002001000Mar. '18Mar. '20Mar. '19Yes Bank'sclosingstock price367.9
 

Source: RBI, Annual reports of banks, BSE Sensex

Note: The print version of the graphic incorrectly noted that the profitability graph plotted Return of Assets, while it had actually plotted the y-o-y change of the same.

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