Why are YES Bank shares rising for two sessions?

Shares of YES Bank gained over 7% on Tuesday morning amid a report that the private sector lender is looking to sell another ₹4,233 crore distressed loan book. Last year, the lender sold a ₹48,000 crore non-performing loan portfolio to JC Flowers ARC, which was one of the largest secondary market trades in the distressed loan segment.

As per the report, YES Bank is seeking buyers for its ₹4,233 crore outstanding debts, which comprises corporate loan portfolio of ₹3,091 crore and retail portfolio of ₹1,142 crore, as per notices issued to finance companies and asset reconstruction companies (ARC).

Extending gains for the second consecutive session, YES Bank shares opened higher at ₹20.46 against the previous closing price of ₹20.26 on the BSE. In the first two hours of trade so far, the banking stock rose as much as 7.1% to ₹21.7, while the market capitalisation climbed to ₹62,035 crore.

YES Bank shares have witnessed sharp volatility in the last one year, with the stock price hitting a 52-week high of ₹24.75 on December 14, 2022, and a 52-week low of ₹14.10 on October 23, 2023. The counter has given a flat return of 2% in the last one year and a negative return of 1% in the calendar year 2023. The stock, however, saw some recovery in the last six months, rising more than 31% during this period amid improvement in financial performance and asset quality.

In December last year, YES Bank concluded the sale of ₹48,000 crore stressed asset loan portfolio to JC Flowers Asset Reconstruction company. The JC Flowers ARC was the winner of the Swiss Challenge process for the sale of distressed loan book of YES Bank. Under the Swiss Challenge method of bidding, the highest bid placed in the first round of auction becomes the base price for other bidders before the second round of auction.

At the end of September quarter of 2023, the ratio of the gross non-performing assets (GNPA) of the total advances stood at 2%, which was flat on sequential basis, but improved sharply from 12.9% in Q2 FY23. The NNPA ratio dropped to 0.9% from 3.6% in the same period last year and 1% in Q1 FY24. The gross slippages stood at ₹1,199 crore as compared to ₹896 crore in Q2 FY23 and ₹1,430 crore in Q1 FY24.

For Q2 FY24, YES Bank reported a 47.4% year-on-year rise in consolidated net profit to ₹225.21 crore as against ₹152.82 crore in the same period last year. Sequentially, the company’s  profit declined by 34.3% as against ₹343 crore in the June quarter of FY24.

In the July-September quarter of FY24, the net interest income declined by 3.3% year-on-year to ₹1,925 crore, as against ₹1,991 crore in the same period last year. Sequentially, the company’s net interest income fell 3.7% from ₹2,000 crore in the June quarter.

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