Yes Bank’s asset quality stress to rise in near-term

Private lenders Yes Bank NSE 3.56% could face problems with the quality of nearby assets as the epidemic continues to wreak havoc on a large part of the legal and informal economy. A report released by Macquarie Capital, which recently met with Yes Bank executives, said the lender could see pressure on the real estate industry.

Yes, the Bank is likely to face significant real estate pressure in the next few houses, the Economic Times said, citing Macquarie Capital’s report. Macquarie Capital recently met with Yes Bank executives, saying the lender could see pressure on his exposure to the real estate and hospitality sectors, reports The Economic Times.

There will be a significant increase in pressure in the next two divisions as they have significant exposure to the real estate and hotel industry where there is a potential for failure, said Suresh Ganapathy, co-director, at Macquarie Capital in a letter cited by the publication. Yes Bank executives have told Macquarie that they have pre-loaded provisions and do not see any major financial collapse, the report said.

Managers have made it clear that they are taking precautionary measures in the worst-case scenario, after preparing for Covid’s delivery and expected delivery over the next six months, they do not expect the CET1 rate to drop below 12 percent by the end of March 2021 from now 13.13 percent, Ganapathy said.

Ganapathy also noted that the changes took place at Yes Bank following the March 2020 rescue plan launched by the Reserve Bank of India (RBI), the State Bank of India (SBI), and other financial institutions.

Meanwhile, the stock has seen a 24% rise in a month amid the rise in the private banking index, and broader indices Sensex and Nifty have been recording highs. The new management clearly distinguishes between risk and business, Macquarie said in a letter. Macquarie also said that signals ahead of business show that Yes Bank is looking at recovery. 


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