A sharp rise in provisions for bad loans saw Yes Bank reporting a surprise loss in the March quarter.

The private sector lender suffered a net loss of Rs 1,506.6 crore against a net profit of Rs 1,179.4 crore a year ago.

Analysts had expected the bank to post a net profit of around Rs 1,000 crore. However, provisions spiked over nine times to Rs 3,661.7 crore from Rs 399.6 crore in the year-ago period.

Yes Bank said it had created a contingency provision of Rs 2,100 crore following a review of its credit portfolio. These pertain to certain performing accounts which came under stress because of market and liquidity conditions.

The bank made specific loan loss provisions of Rs 1,270 crore, investment mark-to-market provisions of Rs 243 crore and other provisions of Rs 48 crore.

The bank said it has an outstanding exposure of Rs 2,528 crore as of March 31, 2019 to various companies and special purpose vehicles of IL&FS. Of this, it classified Rs 2,442 crore as non performing assets (NPA). The National Company Law Appellate Tribunal had asked banks not to declare their loans to IL&FS and its group firms as NPAs without its permission.

There was disappointing news on the asset quality front, too. Gross NPAs rose to Rs 7,882.56 crore against Rs 5,158.62 crore in the preceding three months and Rs 2,626.80 crore a year ago.

Gross NPAs as a percentage of bad assets rose to 3.22 per cent from 2.10 per cent on a sequential basis and 1.28 per cent a year ago.

During the quarter, gross slippages stood at Rs 3,481 crore. The bank said an airline, which was operational during the period under review, accounted for slippages of Rs 552 crore.

Net interest income, which is interest earned minus interest paid, grew 16.3 per cent in the quarter to Rs 2,506 crore. Non-interest income dropped almost 63 per cent to Rs 532 crore.

Advances showed a growth of around 19 per cent to Rs 2,41,500 crore, while deposits rose 13.4 per cent to Rs 2,27,610 crore from a year ago.

“In this phase of our journey, we will lay emphasis on granularity, sustainability and digitalisation while maintaining highest standards on compliance and prudence in risk,” Ravneet Gill, managing director and CEO of the bank, said.

I am confident that our robust Transaction Banking, Retail and Digital platforms will allow us to accelerate granularity in our businesses’’ Ravneet Gill, Managing Director and CEO said.