Yes Bank Shares Rebound as Management Challenges UBS Downgrade

Sharemasterindia.com: Yes Bank shares rebounded nearly 3 per cent on Thursday following the 7.5 per cent plunge yesterday. The intense selling pressure in Yes Bank on Wednesday was attributed to a downgrade by global investment bank UBS.

UBS, in research published on Tuesday, said loan approvals to stressed companies had risen 85 per cent in three years to March 2015, adding Yes Bank had shown the biggest rise. UBS downgraded Yes Bank to "sell" and slashed its target price on the stock by 26 per cent, saying the lender was "most vulnerable to a large corporate default".

Yes Bank, India's fifth-biggest private sector lender by assets, however, challenged UBS findings. Yes Bank's chief financial officer Rajat Monga told NDTV that UBS' assessment was not based on correct data. Yes Bank was lending prudently and did not expect a spike in bad loans, he added.

"The source of the information is not current, is my point number one. It exaggerates, is my point number two," Mr Monga told Reuters.

Yes Bank also got a shot in the arm when Macquarie came out with a report saying "worries might be exaggerated".

"The proportion of RWA (Risk Weighted Assets)  to total assets for Yes Bank is better than average of its private sector peers over the years... in terms of RWA to total assets, Yes Bank is even better than IndusInd and ICICI Bank," Macquarie said.


The brokerage advised investors to use the weakness in Yes Bank shares to add more. Macquarie has a 12-month target of Rs 1,020 on Yes Bank.

Yes Bank shares were on track to snap a three-day losing streak on Thursday; the stock was up 1.32 per cent at Rs 808 as of 10.35 a.m., outperforming the broader Bank Nifty, which traded flat.