YES Bank Ltd. share price target

We met Yes Bank's senior management recently and continue to remain positive about the bank's execution abilities. Key takeaways from the meeting: a) Asset quality: The space to look out for any incremental stress will be the power sector (especially thermal) and some telecom sector companies. Management believes most of the NCLT cases will go for restructuring rather than liquidation and IRPs have already begun receiving restructuring proposals. b)International Financial Reporting Standards (IFRS): While the timelines on implementation are still not clear, Yes Bank will need additional provisioning to the extent of INR 6bn-INR 7bn and will potentially have an impact on fee income recognition (15%-20%...

Yes Bank reported higher PAT at ~Rs 9.7 bn (up 32% YoY) aided by strong NII growth (up 44% YoY) and significant improvement in asset quality (GNPAs down 32% QoQ in absolute terms).

Strong Performance on All Fronts: Upgrade to BUY YES Bank has delivered higher-than-estimated operating performance in 1QFY18 driven by (a) sharp sequential growth in NII aided by sequential improvement in NIMs of 3.7%; (b) stellar business growth led by consumer loans and corporate banking portfolio; and (c) sequential decline in provisioning expenses owing to higher upgrades and recovery coupled with lower fresh slippages. The Bank demonstrated all round improvement in asset quality front led by 89.5% QoQ decline in fresh slippages, 32.4% QoQ decline in gross NPA and 49.1% decline in net...

On the liability side of the balance sheet, around ~39% of Yes Bank's deposits is wholesale funded that is highly sensitive to interest rates Amount unlike steady retail deposits. However, with a gradual CASA build-up to | 78263 crore 36%, the bank has consistently managed its NIM well. Factoring in | 1364 crore positives from incremental CASA and rising proportion of high yielding...

Asset Quality improved sharply as GNPA contracted by 55bps QoQ to 0.97% and NNPA also contracted by 42bps to 0.39% in 1QFY18 as the bank recovered ~60% from one account classified as NPA in 4QFY17 in-line with the guidance (the balance amount is expected in due course). There...

Net Profit of Rs.965.5 Crores in Q1FY18; y-o-y growth of 31.9%, Net Interest Income of Rs.1,808.9 Crores for Q1FY18; y-o-y growth of 44.0% driven by growth in Advances & CASA, and steady expansion in NIM, NIM expanded to 3.7% for Q1FY18 from 3.6% in Q4FY17, NonInterest Income of Rs.1,132.2 Crores for Q1FY18; y-o-y growth of 17.8%, Total Net Income of Rs.2,941.1 Crores in Q1FY18 y-o-y growth of 32.7%, Operating Profit of Rs.1,704.2 Crores for...

YES surprised with outsized loan slippages though a significant chunk, ~46% (Rs9,110 mn) was contributed by a single account, which the bank expects to recover in FY18E. The profit beat was welcome given the higher provisions YES incurred in Q4FY17. The...

Asset Quality declined sharply as GNPA increased by 67bps QoQ to 1.52% and NNPA remained increased by 52bps to 0.81% in 4QFY17. The bank had to recognize one large account in cement sector worth INR 9.1bn as NPA based on the RBI audit which pushed the credit cost higher to 19bps for the quarter as against 8bps in 3QFY17. However, the bank expects to recover the same in 1HFY18. The bank sold assets (3 accounts) worth INR 8.7bn (INR 7bn received as SR) to ARCs...

NII increased to Rs. 1639.7 Cr in Q4FY17 compared to Rs. 1507.5 Cr in Q3FY17.