Yes Bank showed an improvement in net profit but the most crucial aspect – asset quality, deteriorated. The Bank reported a sharp jump in bad loans or NPAs mainly on account of its adjustment – there was a sharp divergence in FY17 between what the RBI had classified as NPAs and what the Bank had tagged as bad loans. It had closed FY17 with a Gross NPA at Rs.2018 crore which the RBI had pegged this figure at Rs.8374 crore.  This divergence of Rs.6355 crore and since then been adjusted – 47% was upgraded in H1FY18, 27% was repaid, 19% was classified as NPA in Q2FY18 and balance 7% was sold to ARCs.

Consequently, in current Q2FY18,  on a sequential basis, Gross NPA rose to 1.82% from 0.97% and Net NPA rose much sharply from 0.39% to 1.04%. Provisions rose to Rs.1177 crore from Rs.819 crore. Total slippages were at Rs.1989 crore. Provision coverage fell from 60% to 43.3%.

In terms of profitability, net profit rose 25% (YoY) to Rs.1003 crore and this was on a 33% rise in NII while other income rose 35%.

Not surprisingly, Yes Bank tanked almost 3.5% to Rs.299 and is the top loser on the BSE.