Yes Bank faces trust deficit; massive withdrawals as deposits shrink

Yes Bank on Wednesday, May 6, reported a net loss worth Rs 3,668 crore for the fourth quarter (Q4) of the Fiscal Year (FY) 2019-20. The private lender posted a massive loss for Q4 that ended March 31 as deposits continued to erode even after several financial institutions came forward to save its sinking ship.

However, if the one-time income gain of Rs 8,415 from the write-down of Basel III compliant Additional Tier I (AT I) Bonds is taken into consideration, the crisis-hit bank has posted a net profit worth Rs 2.665 crore for Q4. Further, Yes Bank's Net Interest Income (NII) for the last quarter of FY 2019-20 grew 19.6% at ₹1,274.

In the preceding quarter Q3FY20 ended December 31, Yes Bank had posted a record loss of Rs 18,564 crore. As for the corresponding quarter of the previous year, it reported a net loss of Rs 1,506 crore.

Deposits dip further

Yes Bank's annual losses for FY 2019-20 stood at a staggering Rs 22,714 crore mainly due to the continuous decrease in deposits as customers made massive withdrawals over the last couple of quarters.

The situation did not improve even after the State Bank of India (SBI) took over as the Mumbai-headquartered bank saw a further dip in its deposits by Rs 34,789 crore. Most of these withdrawals were made post the lifting of the moratorium by the Reserve Bank of India (RBI) on March 18.

With this, Yes Bank's deposit base has shrunk from Rs 2.09 lakh crore on September 30 to Rs 1.05 lakh crore by March-end. The massive depletion of deposits has impacted the CASA ratio, bringing it down by 5.5 percent to 26.6% by the end of FY 2019-20.

As a result, the bank's quarterly average Liquidity Coverage Ratio (LCR) has fallen from 74% in Q3 to 40 percent for Q4.

Is Kotak Mahindra no more a shareholder in Yes Bank?

A host of India's leading financial institutions had come forward to revive Yes Bank with SBI leading the charge as it invested a whopping Rs 6,050 crore and acquired 49% shares. Also lending helping hands were HDFC Bank and ICICI Bank with an investment of Rs 1,000 crore each, while Axis Bank and Kotak Mahindra Bank invested Rs 600 crore and Rs 500 crore respectively.

However, the current shareholding pattern of the troubled bank indicates that the Kotak Mahindra Bank has probably sold a major part of its holding as the shareholders' list does not carry its name anymore.