EXECUTIVE SUMMARY. Yes Bank’s loss in 4QFY19 would have been much higher, by Rs 16.6 bn, and its annual profit significantly lower, had it not been for the increase in the net deferred tax asset (DTA) of the same amount. The huge increase in the DTA partly offset the large provision the bank made for standard and non-performing assets. Although such accounting is permissible under regulatory norms, it inflates current profits, and depresses future profits. In the opinion of this writer, it is not a prudent practice. The management probably were of the view that reporting a larger loss than what they reported in the 4QFY19 would unnerve shareholders and depositors; as it is the stock market immediately reacted to the results with a 29% fall in the share price. The bank, though, has merely deferred the negative impact, and shareholders should be enlightened about the accounting treatment. The saving grace is that the new CEO is cleaning up the bank and its bad assets will become more transparent than in the past.
Will IndusInd’s Much-Needed Reorganisation of Corporate Lending Trigger Another Round of Whistleblowing?
EXECUTIVE SUMMARY. Indusind Bank shareholders are paying a heavy price for senior executive-level reorganisation in Bharat Financial Inclusion (BFI), which backfired as...
By Quentin Webb and Shefali Anand Updated Nov. 22, 2021 7:27 am ET
The bank’s official explanation of a technical glitch needs to be examined, by the RBI, which should commission a probe.
EXECUTIVE SUMMARY. On November 5, 2021, the auspicious day of the Hindu New Year, the Economic Times burst a firecracker of a...