YES Bank files prospectus with RoC to raise up to Rs 15,000 cr via FPO

Restates accounts for last three years, but no impact on bottom line

YES Bank has filed its prospectus with the Registrar of Companies (RoC) to raise about Rs 15,000 crore by launching a follow-on offer. The offer price band is likely to be in the Rs 12-15 range, and the offer might be launched as early as next week, said banking sources.

The issue has been filed under the fast-track issues norms, under which companies that meet certain criteria can proceed with the issue by filing a copy of the prospectus with the RoC or letter of offer with stock exchanges and the Securities and Exchange Board of India (Sebi).

The bank revised its financials for the last three years before the RoC filing. The bank reported a net loss of Rs 16,418 crore in financial year 2019-20 (FY20). 

The bank made additional provisions for the period ending December 2019 of Rs 15,422 crore as several of its corporate clients defaulted on loans.

The key change in its restated accounts is in the profit and loss accounts for the last three years, while there is no change in assets or liabilities for the period. For example, provisions for bad loans more than doubled in FY18 from Rs 1,554 crore reported earlier to Rs 3,526 crore in restated accounts.

 

The bank also made additional provisions of Rs 640 crore for FY19. However, provisions for bad loans in FY20 were lowered by Rs 4,406 crore in the restated books from Rs 32,718 crore to Rs 28,312 crore.

On the revenue side, there is an upward revision in fee and other income of Rs 2,118 crore in FY20 or around 6 per cent, compared to the original account.

However, there is no change in the profit or loss figures, which remain the same as earlier. This keeps the bank’s valuation ratios such as price-to-earnings multiple and price-to-book value unchanged.

In the last six months, there has been a significant decline in its deposit base and a sharp rise in the non-performing assets as the new management, led by former State Bank of India executive Prashant Kumar, is trying to resurrect it.

The bank’s deposit base was down 54 per cent year-on-year (YoY) in FY20 to Rs 1.05 trillion, while total assets were down 32.3 per cent YoY. In comparison, interest earning assets advances and investment were down 29 per cent and 51 per cent YoY, respectively.

YES Bank however clarified that there is no change between restated financial results and the earlier published financial results. The apparent difference in provision for non-performing assets and other provisions and total revenues is because in restated accounts the numbers include corporate income tax. In comparison, in the earlier published results which was sourced from Capitaline database taxes were reported separately. 
 

Similarly, banks revenues for FY20 is higher in restated accounts it grossed-up the tax-effect of 2118 crore on AT T1 bond write down. In the earlier published results gains were shown net of taxes.