October 3, 2019 / 3:54 AM / 2 months ago

Yes Bank CEO says lender 'very stable'; shares surge

MUMBAI (Reuters) - Private-sector lender Yes Bank’s (YESB.NS) Chief Executive Officer Ravneet Gill assured investors on Thursday that the bank remains on solid financial footing, sending its stock as much as 25% higher.

FILE PHOTO: A security guard stands outside a Yes Bank branch at its headquarters in Mumbai, India January 17, 2018. REUTERS/Danish Siddiqui/File Photo

His remarks come after the stock plunged nearly 23% on Tuesday as fraud allegations against a housing finance company that Yes Bank has exposure to, spooked investors. A stake sale by its promoters also weighed on sentiment.

Two of the bank’s promoter companies, led by former CEO Rana Kapoor and his family, said on Thursday they cut stakes over the last two weeks to reduce debt in their own companies, further seeking to allay investor concerns.

The recent price drop does not reflect the bank’s performance, its CEO said during a conference call, adding the operating metrics and fundamentals of the bank were sound.

“We have enough liquidity, we are very stable and the share price movement of recent days should not become a proxy for how the bank gets perceived.”

Gill also said the bank was in talks with private equity firms, strategic investors and family offices to raise additional capital.

Yes Bank also said that there was no incremental stress building up in its loan book, but a credit squeeze in the broader economy had an impact on the overall asset quality of the bank.

The lender’s management added they have been trying to conserve capital by reducing wholesale lending, while increasing it to government and small and medium enterprises (SMEs).

“The asset quality has held up pretty well, “said Chief Risk Officer Ashish Agarwal speaking about the bank’s bad loan recoveries.

“We are absolutely 200% confident that we are good.”

Speaking on a dip in the bank’s current and saving account (CASA) share, the management assured that the reduction in deposit was not a result of withdrawal pressure from depositors.

In the quarter ended June, the bank had reported gross slippages of 62.32 billion rupees ($875.18 million), while recoveries and upgrades were at 16.78 billion rupees.

The bank also confirmed that Rajat Monga, its group president, who earlier also held the position of the chief financial officer, has stepped down due to health reasons.

Reporting by Nupur Anand; editing by Uttaresh.V

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