Yes Bank to trim branches, ATMs and office spaces to lower costs | Economic Times

Mumbai: Yes Bank has chalked out a plan to close non-performing branches and ATMs, reduce office space by moving to a revolving desk layout and renegotiate contracts with vendors, landlords and contractors, as it seeks to cut costs and save up to ₹600 crore this year.The cost savings will directly go into the bank’s bottomline and make profit more sustainable, chief executive Prashant Kumar told ET in an interview.In the quarter ended September, the bank converted 35 rural branches into low-cost business correspondent centres which together with other measures like digitisation and renegotiating contracts with vendors helped in reducing total operating expenses by 21%, contributing to its profit. Kumar said such measures will continue.“We have identified 50 more branches to merge to ultimately reduce them by 25. We are also preparing a work-from-home model that will free up office space and help us save on rentals. We have identified a revolving desk where employees can come and work. We think that we can work with 30-32% employees in the office, which will help in a clear-cut reduction in rental expenses,” Kumar said.Cost cutting will include renegotiating real estate rentals and contracts with vendors. About 50 non-performing offsite ATMs have also been identified and will be closed.The measures initiated this year have resulted in the bank reducing its cost to income ratio to 49.3%, the lowest in five quarters, and Kumar expects to keep the momentum in the second half of the year.Yes Bank is in a recovery mode after a government-approved, State Bank of India-led bailout in March following a near collapse of the lender due to a sharp rise in non-performing assets.Kumar said the bank was still not sure how much of its overdue loans post Covid-19 would have to be restructured. Yes Bank has identified ₹9,000 crore of loans for which repayment has been impacted due to the pandemic. “For these loans, there are three possibilities: some of it may be upgraded, some may need restructuring and some others may slip into NPAs… Out of these loans, ₹2,000 crore are loans to real estate and ₹1,700 crore are to the hospitality sector which are the two large chunks,” he said.The bank has made cumulative Covid-related provisions of ₹1,918 crore which he said would be sufficient for now. This is because Yes Bank expects to make an operating profit in the next quarter that will be enough for any immediate provisioning requirements, he said.Yes Bank plans to shift its NPA and overdue accounts totalling ₹50,000 crore to a bad bank outside it, which will give the management time to focus on the performing assets and save equity capital in the future.“We are yet to create a structure for it. Barring this book, the other part of the bank is strong; so, we need to segregate this book. We have already created a stressed vertical in the bank and we are talking to mostly foreign investors who have the capacity and expertise to manage these assets,” Kumar said, adding that 75% of these loans had already been provided for by the bank.