“Banks led by State Bank of India had come in to support the reconstruction scheme. As per regulations, banks cannot remain invested in other banks,” said Kumar in an exclusive interaction with ET. “At some point, we need to provide exit to our shareholders, especially SBI. It’s very difficult to give you a definitive timeline but it is something that everyone will try to do at the earliest.”
Kumar also confirmed that the shareholders and Yes Bank were in talks with potential investors. “That is a continuous process,” he said.
Multiple reports have highlighted that Yes Bank is in talks with a clutch of international investors to sell a majority stake in the lender.
At present, SBI and other Indian banks jointly own 33.74%. In March 2020, SBI, erstwhile Housing Development Finance Corp, ICICI Bank, Axis Bank, Kotak Mahindra Bank, Federal Bank, Bandhan Bank, and IDFC First Bank had cumulatively invested ₹10,000 crore in Yes Bank to save the lender from bankruptcy.Kumar also said that the bad loan sale to JC Flowers has turned out to be a lucrative transaction for the lender.”This (ARC) transaction has been extremely beneficial for the bank. In 18 months, we have been able to resolve more than 50% of security receipts. There were ₹6,800 crore of security receipts out of which ₹3,400 crore have already been resolved. And over and above the security receipts, we have got an upside of ₹1,000 crore over and above these receipts,” Kumar said. “The net carry value of the remaining receipts is only 0.4%.”Kumar added that the bank expects to resolve another 25% of the remaining security receipts in the next 12 months. The bank has also guided that by the end of this fiscal year, the net carrying value of the security receipts will be zero.
JC Flowers ARC had purchased a pool of NPA assets worth ₹48,000 crore from Yes Bank for a price of ₹11,200 crore as of March 2022.
The bank has also been an outlier among its peers in expanding its deposit base. Its total deposits grew to ₹2.6 lakh crore, recording a growth of 20.8% on year.
“The way we are able to service our customer relationship and offer convenience through the digital means is the only reason why we are able to have better deposit growth than other banks,” Kumar said. “We plan to continue with the same focus and have better growth rates than the market. We don’t have any plans for a special deposit scheme. We have been able to maintain our cost of deposits.”
Kumar also said that in the next 12-18 months, the bank would be in line with industry peers on the profitability front.
The bank reported a net profit of ₹502.43 crore for the June quarter, a jump of 47% over last year.
“There are certain legacy issues as the bank was not meeting its priority sector lending targets, a large amount of our assets are sitting in the RIDF accounts. Operating profit is growing steadily and we have delivered strong net profit, but the issue is people are judging us as compared to competition. They have completely disregarded where we started from, but I think in another 12-18 months we would be in line with the market on the profitability front,” he said.
The bank has deposits worth ₹44,000 crore stuck in the Rural Infrastructure Development Fund (RIDF), where yields are 2% lower than the current repo rate. It expects ₹11,000 crore to be released in November or December this year, which will positively affect its net interest margins.