Analysts at Narnolia Financial Advisors, on the other hand, expect net interest margin (NIM) to contract given the rise in cost of fund coupled with pressures on fee income due to weak corporate loan book.
"The asset quality is expected to suffer with higher exposure towards newly developed stressed book. The slippages are expected to be high while provisioning is also expected to remain at elevated levels,” they said in their earnings preview.
Foreign brokerage firm UBS also foresees credit costs in FY20/21 to be around 255/200 basis points (bps), higher than the management's guidance of 125 bps. Non-Performing Loan (NPL) risks are also pegged higher than current expectation.
Since April 26, post the January-March quarter (Q4FY19) results, the stock has tanked 56 per cent after the bank posted its first ever net loss of Rs 1,506 crore for Q4FY19 on the back of the provisions soaring over nine times. It had posted a profit of Rs 1,179 crore in the year-ago period. In comparison, the benchmark S&P BSE Sensex remained unchanged during the same time period. Last month, global agencies like UBS and Moody’s investors service downgraded the bank’s ratings.
"Taking into account the bank's own disclosure of the stressed book, as well as our expectation of stress in the Indian housing finance companies, non-banking finance company (NBFC) and real estate sectors, we expect significant pressure on the bank's asset quality and therefore profitability and capital position," Moody's said.
The brokerage, however, says the impact could be somewhat cushioned due to the bank's proactive loan loss provisioning for anticipated stress.
Moody has placed YES Bank's foreign currency issuer rating of Ba1 under review for downgrade as liquidity pressures on finance companies may negatively impact credit profile of the lender.
At 1:27 pm, YES Bank
was trading 3.85 per cent lower at Rs 99.9 on the BSE. The stock was the top loser among the S&P BSE Sensex and Nifty 50 index. The counter has seen huge trading volumes with a combined 183 million shares, representing 8 per cent of total equity of YES Bank, changing hands on the BSE and NSE so far.