YES Bank Ltd. share price target

Slippages have eased significantly to 1.2% (Rs4.9bn) as against 5.5% last quarter. As a result GNPA improved by 10bps sequentially to 1.7%. Yet credit cost of 18bps helped in 310bps imrprovement in provision coverage to 46.4%. Healthy balance sheet growth with loans/deposits growing by 47%/30% respectively. CASA expands by 470bps YoY and 80bps QoQ to 38.0%. NIM deteriorated 20bps sequentially to 3.5% partly attributable to raising of perpetual debt as well as Tier II bonds during the quarter. Despite lower than expected NII and higher than estimated credit cost, PAT beats...

The bank delivered a healthy performance amidst some clatter around headline margins and asset quality numbers. While there was a hitch to asset quality with the bank selling Rs4.5bn in a standard account to ARC, we underscore that even including the same, the slippage ratio looks manageable.

The key highlight was the robust growth of 46.5% YoY in advances to | 171515 crore, led by 44.8% YoY increase in the corporate book NII increase at 25.3% YoY to | 1889 crore was lower-than-expected. Margins dipped 20 bps QoQ to 3.5%. This was on account of raising of high cost (~8.5% rate) perpetual & tier 2 bonds and also due to...

YES reported robust PPoP growth of 38% YoY/5% QoQ to INR20.02b (2.5%beat), led by strong overall revenue growth of 32% YoY and controlled opex.However, higher provisions of INR4.21b- partly led by INR1b requirement toward NCLT-referred assets ??? led to lower 22% YoY growth in net profit. Advances growth accelerated to 46% YoY at INR1.71t, while deposits grew30% YoY to INR1.72t. CASA deposits maintained strong traction, growing by48% YoY, and thus, resulting in an 80bp QoQ increase in CASA mix to 38%(470bp improvement over FY18YTD). Margin shrunk 20bp QoQ to 3.5%, led by (i) INR15b/INR54.15b of Tier-2/AT-1 bond raising and (ii) sale of a standard account to ARC, which led to anINR4.2b increase in SR portfolio. However, management guided to achieve4% margin by FY20. Core cost-income ratio declined 143bp QoQ (employee count declined by 1,656, while the bank opened only 10 branches), and management guided for a 37-38% C/I ratio in the medium term.

Yes Banks (YES) Q2FY18 PAT at Rs 10 bn (up 25% YoY) was in line, but the sharp deterioration in asset quality ruined the show. Slippages rose to ~ Rs 20 bn, as accounts worth Rs 12.2 bn were recognized as NPA on divergence with RBI's inspection, driving GNPA ratio higher to 1.8% vs. 1% in Q1.

Slippages have escalated to 5.5% (annualized) as against 0.6% last quarter, 2/3 rd of slippages attributable to divergence post RBI assessment for FY17. As a result GNPA increased 85bps sequentially to 1.8%, yet they have retained its upper end of credit...

As per RBI's Risk Based Supervision (RBS) exercise for FY17, which concluded in October 2017, the bank had divergence in GNPA of | 6355 crore as on FY17. Divergence in provisioning was | 1536 crore Out of total GNPA divergence of | 6355 crore, | 1219 crore was the final additional impact on Q2FY18 GNPA as the balance either got repaid, or sold to ARC or upgraded to standard category in H1FY18 The bank said it has fully absorbed the impact of divergence in Q2FY18. GNPA increased to | 2720 crore (of which | 1219 crore is...

Operating Performance Improves, but Asset Quality Surprises Negatively Yes Bank continued to deliver higher-than-estimated operating performance in 2QFY18 driven by sharp sequential growth in NII and other income along with stellar business growth led by consumer loans and business banking portfolio. However, the Bank reported the highest ever fresh slippages to the tune of Rs19.9bn led by substantially higher divergence, as suggested by the RBI in Annual Risk Based Supervision Audit and elevated slippages (Rs7.7bn) from other stressed sectors. The Bank has reported a divergence of Rs63.5bn on gross NPA front in RBI Annual Supervision Audit for FY17, out of which only 19% (Rs12.2bn) slipped into NPA, while the...

posted a strong Operating performance in Q2 FY18 boosted by strong business growth (up 28.7% YoY). Its net interest income (NII) grew by 33.5% YoY to Rs1885.1 crore driven by robust 34.9% YoY increase in advances and strong expansion 30 BPS YOY (flat sequentially) in net interest margin (NIM) which was at 3.70%. Buoyed by the balance sheet growth, the Non-interest...

Business growth stood robust, with advances growing 35% YoY to INR1.48t and deposits increasing 23% YoY to INR1.58t. CASA deposits maintained strong traction and reported 51% YoY growth, resulting in a 40bp QoQ increase in the CASA mix to 37.2%. Margins held stable at 3.7%. Cost-income ratio declined 290bp QoQ to 39.2%, and we believe that opex growth for YES will continue to trail revenue growth, as the bank goes slow on branch expansion and focuses on improving productivity. Asset quality deteriorated sharply, affected by the divergence of INR63.55b...