Shares of Yes Bank zoomed almost 31 per cent on Thursday after the private lender said late on Wednesday that the Reserve Bank of India (RBI) did not find any divergence in its asset classification and provisioning in 2017-18.
The sharp uptick in the counter added Rs 12,025 crore to the bank’s market capitalisation as investors felt the announcement removed a major overhang on the stock.
On the BSE, the shares shot up 30.73 per cent, or Rs 51.95, to Rs 221. During intra-day trade, it advanced 32.32 per cent to Rs 223.70.
On the NSE, the shares rose 31.36 per cent to close at Rs 222.60. In terms of volume, 194.98 lakh shares changed hands on the BSE and over 26 crore shares were traded on the NSE.
The bank scrip was the biggest gainer on both the indices. Following the sharp jump in its shares, the company’s market valuation jumped Rs 12,025.11 crore to Rs 51,114.11 crore on the BSE.
Assessment report
The central bank assesses compliance by banks with its prudential norms on income recognition, asset classification and provisioning.
“As part of this process, Yes Bank has received the risk assessment report for 2017-18. The report observes nil divergences in the bank’s asset classification and provisioning from the RBI norms,” the private sector bank had said in a filing on Wednesday.
The RBI, which conducts the inspection of bank books, had found a substantial divergence of Rs 4,176 crore in the reported gross NPAs in the books of Yes Bank for 2015-16.
Further, the central bank assessed gross NPAs at Rs 8,373.8 crore for the bank in 2016-17 against the declared gross NPAs of Rs 2,018 crore. Therefore, there were apprehensions that another divergence could be reported for 2017-18.
“This development comes after months of speculation on the magnitude of divergence that the bank was expected to report (the range was as high as the balance sheet size of some of the smaller banks), particularly after its MD & CEO was forced to step down by the RBI.
“Clarity in this regard will thus help the bank to clear air on one of the key overhangs and start a fresh journey under the new MD & CEO, who has to join office before March 1,” brokerage Motilal Oswal said in a note. It has a buy rating on the stock with a target price of Rs 270.