Yes Bank shares fell nearly 13% in intraday trading on Thursday after foreign brokerage UBS lowered its target target to Rs 90, 47% less than the earlier forecast of Rs 170. At 11:50, Yes Bank shares were traded at Rs 119.10 each, a decrease of 11.6% on BSE.
UBS downgraded the Ja Bank share to & # 39; sell & # 39; due to higher than expected risks of bad loans and moderating credit growth. A sharp turnaround for Yes Bank is less likely to be fertilized, according to UBS.
The brokerage firm raised the estimated FY20 credit costs for Yes Bank to 250 basis points from 200 basis points earlier, higher than the management guidance of 125 basis points. UBS also lowered the bank's profit expectations by 79% for FY20.
Earlier on Tuesday, global rating agency Moody & # 39; s also issued Ja-bank's foreign currency rating for Ba1 under review for downgrade, fearing that liquidity pressures on finance companies could have a negative impact on the bank's credit profile.
Moody & # 39; s also said it expected significant pressure on the quality of the assets of Ja Bank and thus the profitability and capital position in the near future. "In April, the bank classified approximately Rs 10,000 crore of its positions, representing 4.1% of total loans under the watch list, which could translate into non-performing loans in the coming 12 months. Nevertheless, the impact will be absorbed somewhat by the proactive provision of credit losses by the bank for expected stress, "it stated.
The shares of Yes Bank have also remained under pressure after two directors decided to resign as members of their positions in the current week. A day after the resignation of non-executive director Ajai Kumar, the non-executive independent director Mukesh Sabharwal also resigned from the board on 11 June.
At his AGM on Wednesday, Ja Bank CEO Ravneet Gill promised shareholders that management would make every effort to maintain their confidence, focus on risk management and restore the bank to its former glory. He also said that the bank's asset quality problems were disproportionately inflated.
& # 39; Late on Wednesday, Yes Bank also commented on stock exchanges that denied an Economic Times report suggesting that founder Rana Kapoor demanded a board seat and compensation that led to the resignation of independent members.
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