It wasn’t all smooth sailing for YES Bank in the March quarter. While core performance was on a strong wicket with loan book growing a robust 35 per cent year-on-year, the nasty jolt on the asset quality front has dampened investor sentiment. Bad loans during the March quarter doubled sequentially to around ₹2,000 crore. The sharp increase was in accordance with the divergences observed by the RBI. The central bank recently issued a circular that requires banks to make suitable disclosures in instances of material divergences in banks’ asset classification and provisioning from the norms.

The increase in YES Bank’s non-performing assets (NPAs) pertains to one borrower with gross exposure of 0.69 per cent of loans (₹911.5 crore). This slippage could weigh on the stock, even while the robust 30 per cent growth in earnings is a key positive, given the uncertainty surrounding the performance of other private lenders such as ICICI Bank and Axis Bank.