To buy to sell Yes Bank to share
And the fear of more bad debts has all but disappeared. The allowance for bad debts, money set aside from profits to cover future losses from unpaid loans, fell 95% between January and March 2022.
No wonder the stock jumped 5% on May 2 (Monday) before calming down.
Prashant Kumar, Managing Director and CEO of YES Bank, told CNBC-TV18 that the lender had recovered Rs 13,000 crore in delinquent loans over the past two years and could recover another Rs 5,000 crore at the over the next 12 months.
“Our net NPA ratio is now down to 4.5%, so this pull would continue and we now have very good control of the slippage. The fourth quarter slippage was the lowest and we expect that in the worst case scenario, even in the current fiscal year, we will be able to contain the slippage to less than 2%. And the type of recovery we are seeing would certainly support our credit costs due to the slippage,” Kumar said in an interview.
A low slippage rate indicates better quality of the bank’s assets. The slippage rate is the rate at which good loans become bad.
Lending more to retail borrowers has helped Yes Bank. For three rupees lent to retail borrowers, ie individuals and small borrowers, the bank lends two rupees to businesses, explained Nirav Karkera, head of research at Fisdom.
The best part about cleaning up bad debts and getting the money back is that the bank is now more aggressive in finding new borrowers.
This is already visible in the March 2022 figures. The bank disbursed over Rs. 70,000 crore last year, that is a growth of 8%. Personal lending grew at almost 4 times the speed, 31%.
First post: STI
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