Yes bank

(piggyway) #202

No, that’s why I want it to be compared with the same time lag.

Yes (Year 0) cannot be subsidized by Yes (Year 2/3)'s advances, especially when a good part of Year 2/3 is funded by new capital. Advances growing faster can hide the NPA problem. What I am saying compare a year’s advances and see how much is in bad state after three years. That gives the ability to assess loan quality by the bank on level playing ground.

Else, you will always have a bank growing on new capital, writing new loans and effectively asking everyone to forget its past loans quality issue. Looks like I am talking about ICICI from 2004-07 / 2010-12 :wink:

(ranvir dehal) #204

@ Piggyway… Ur argument is compelling…its bringing out the detail which is really informative.
But I have question. Should there be pressure on asset quality, will it not show up somewhere?
At least in restructured loans?? Also the absolute value of GNPA in terms of crores of rupees is pretty paltry wrt NP.
All this should be a source of comfort. Isn’t it??

Please correct me if I am wrong.

(piggyway) #205

As I disclosed earlier, I own the stock since 2010 as I am comfortable with things as they are today.

Yes, as you say NPAs will show somewhere. But as % of today’s advances, it will look small. So compare with the past. That’s all.

I don’t want to get too excited and believe this bank will get re-rated to 4 times BV as it is not HDFC Bank. I still question why IndusInd and Kotak deserve that valuation. At 2.5 BV, I feel Yes Bank is fairly valued.

(csteja) #206

I agree with sumit. Quite surprised by yes bank results though. The UBS report is lower bound on how bad loans can hurt yb. The report calculated based on the fact that 20% of stressed loans may turn defaults (reasonable). When big banks like Axis bank and ICICI are struggling with their NPA’s, I don’t believe yb is resilient at all (to steel/power sector bad loans). Some day the NPAs may show up. If the economy doesn’t turn around yb will be hurt the most.

If the economy doesnt turn around quite well, yb will take the blow. (The collaterals with yb are very bad.)
If the economy does turn out well, yb may become a multibagger.

But, I would opt not to take risk. Anyways, this is my personal opinion.

DISC: Invested in yes bank.

(Vishnu Ch) #207


Yes Bank

Expects to sustain NIM improvement, touch 2500 branches by 2020

Yes Bank conducted concall on 28 January 2016 to discuss financial performance for the quarter ended December 2015 and the prospects of the bank. Rajat Monga, Senior Group President, Financial Markets & CFO addressed the call:

Bank has been setting its based on marginal cost pricing, so the newly announced marginal cost based base rate formula to be implemented from 01 April 2016 would not have any impact on banks margin.

However, the new base rate formula would help bank to set base rate with enhanced retail assets perspective.

Retail and business banking segment are contributing increasingly to the loan book, while its share in loan book is expected to increase to 45% by 2020 from present 32-33%. Bank proposes to improve the share of retail business by 200-300 bps every year.

The earning assets such as commercial vehicle, Loan Against Property etc contribute 60-70% of retail loan book constituting 9.5% of the overall loan book. As per the bank, consumption assets such as personal loans along with home loans would gain share to more than 50% of retail loan book by 2020.

The deposit base of the bank has crossed Rs 1 lakh crore level in Q3FY2016. CASA ratio ratio has continued improving to 26.6% at end December 2015.

Bank proposes to improve the share of CASA deposits ratio by 300-400 bps every year to touch 40% level in 3-4 years.

Despite 1% rate cut on saving bank deposits, bank has posted strong 64% rise in saving deposits. Meanwhile, the saving bank rate cut in last quarter contributed to further margin improvement of 5-6 bps in Q3FY2016.

Retail deposits of the bank have increased strongly to 54% of total deposits at end December 2015 from 45% a year ago.

Saving account customer base of the bank stood at 1.2 million, which is rising 15-20% on qoq basis.

Bank has recorded healthy 20 bps yoy improvement in NIMs to 3.4% in Q3FY2016. Bank expect to continue improving margins with focusing on consistently raising CASA deposits and retails loans share.

The credit cost for bank stood at 14 bps (annualised 57 bps) for Q3 and 45 bps for 9MFY2016. Bank expects credit cost to remain below 50 bps for FY2016 against earlier guidance of 50-70 bps.

The contingent provisions of the bank stood at 40 bps, which are down from peak of 50 bps mainly on account of strong loan growth.

Bank has not conducted any fresh restructuring of advances in Q3FY2016, while bank witnessed some recovery in restructured advance book. However, the restructured advance book was stable at 67 bps at end December 2015.

As per the bank, 12 out of 15 accounts in the restructured advance book are showing improvement and returning to normalcy.

Of the Total Restructured Advances of 0.67%, 0.34% is on account of delay in project completion in roads (3 accounts), which the Bank expects will achieve project closure over the next 9 months given accelerated de-stressing of the road sector. Of the balance portfolio, the restructuring packages have been performing in line with expectations, and the Bank, does not anticipate any material slippages in this book.

Bank did not conducted any asset sale to asset reconstruction companies (ARCs) in Q3 as well as for last five quarters.

SRs net of provision stands at Rs 212.4 crore (0.25% of Advances, comprising 10 borrowers). Bank is expecting recovery of about 35% of SRs over next two quarters.

Bank has not refinanced any loan through 5-25 route and has not participated in any SDR since the introduction of these schemes.

Fresh slippages of advances stood at Rs 288 crore, while recoveries at Rs 90 crore in Q3FY2016. The write-offs were at Rs 129 crore in Q3FY2016.

About 75% of the loan book of the bank is A category or better rates. Meanwhile, the investment book also well rated except one investment of about Rs 50 crore which below investment grade but closer to redemption.

Sector wise NPAs were contributed by sector such as roads, EPC, cement, real estate, engineering and textiles.

As per the bank, it has dealt with about 75% of the NPAs identified by RBI in their observations. The remaining stressed asset of 25% would be dealt with in Q4FY2016. Also, the provisions made in Q3FY2016 is much higher than RBI requirements.

The headcount of the bank increased to 13477 at end December 2015, with an addition of 777 employees in Q3FY2016. Bank has deployed about 75% of its staff in retail business.

Banks branch network stood at 750 branches at end December 2015, with an addition of 50 branches in Q3FY2016. Banks proposes to improve branch network to 2500 branches by 2020.

The liquidity coverage Ratio (LCR) was healthy at 88% at end December 2015.

The bank is expecting loan-deposit growth of mid-20’s for FY2017.

(Nikhil Rodrigues) #208

Guidance of 2500 branches by 2020. Thats more than 3 times in 4 years. Looks overly ambitious target.

Yes bank has given such ambitious targets in past which they failed to achieve. For example, their version 2.0 was supposed to take balance sheet to 1.5 Lakh Cr, deposits to 1.25 L Cr and advances of 1L+ Cr by FY15. I personally do not like such aggressive targets from managements of banks/NBFC’s.

(vaibhav) #209

On the advertising front , they are doing very well IMO, for ex. On E-commerce websites. Every Indian uses (or will use) flipkart/amazon/snapdeal where YB’s visibility is quite high. Providing cashbacks will act as an incentive for people for opening bank accounts with YB. Should have appropriate no. Of physical branches as well to support that. 2500 bank branches should be a good goal as YB wants to be in league of HDFC , Icici and axis. If one looks at past years’ deposit bases and CASA, the bank has already been growing at a scorching pace.

(Sunil) #210

Please pardon my very basic question.

Why Yes bank has low NPA’s compared to Axis or ICICI? Is it because they lend to some different categories or are they more stringent in lending compared to Axis and ICICI? If they are stringent how can loan book grow at such high rates?

(NNaik) #211

this is definitely a thing to dig deeper and would be something to get answer from. The bank has similar lending profile and also is fairly aggressive in terms of expanding the loan book.

I have been interested in Yes Bank for some time but some times the numbers look too good and it is always better to be double cautious when dealing with banking which is essentially a highly leverages play.

one would need to see the consistency of results and numbers over time like HDFC

(chirag jain) #212


Agree with you on this aspect.

Numbers are too good to believe and moreover Yes bank just started in retail banking couple of years ago and it was more into business class banking.

If the quality of balance sheet and performance is too good or par with HDFC then why it is not enjoying the same valuation as HDFC bank have.

I always have seen yes bank suspiciously on this matter.

Disc : Not invested

(manomagg3) #213

we are forgetting that Yes Bank is a owner driven bank
Is the same is not true for Bajaj finance and Kotak , which are also owner driven and showing strong results year or years

also please remember the base of yes bank is much smaller as compared to Axis and ICICI bank

does any one has any experience in dealing with yes Bank?

(GSApte) #214

I am also of the opinion that, since Yes Bank was primarily Wholesale Bank till 2-3 years back, the actual NPA(s) may surface at some later stage, and hence Mr. Market might be giving it low multiples.

Though the results are fantastic as always, this particular part has not allowed me to invest in it for long term in this stock. I generally have considered it for short term investment and have booked profits once it looks overvalued.

I have visited their branch in Mumbai suburban area once and staff was very new and inexperienced and I decided not to open account with them 3 years back. Things might have improved now, so some one who is customer of Yes Bank can throw more light on their staff and banking experience.

(Aniket Gore) #215

I have one reliable input from rural maharashtra where a project with assets worth 70 crores ie fundable till about 50 crores were funded 250 crores by yes bank and the promoter of this project is now absconding.

I have stayed away from yb…IMHO there are better prospects in this space.

This is not an avoid recommendation please do your own due diligence.

(MG) #216

Hi all,

I wonder at what level one can extrapolate individual experience. Anyways seeing the above discussion - i believe mine would be interesting for anyone who would be deducing something out of this.:grin:

To begin with i should mention - i’m a customer and shareholder of Yes bank & had been a part of banking circles talks/discussions which inter alia includes Yes bank & even few friends have worked there

As a retail customer

  • Saved couple of thousands of rupees in last 1 year, due to there transaction cost structure (yes i approximated that) + Earned noticeable extra interest on the liquid money lying in savings a/c. Will go on to the extent of advising people to switch there savings bank a/c to YB - if they are heavy user for the above.
  • No issues with the service quality. Only qualms is that they took a lot of time while opening the a/c but once opened, its a breeze

As a shareholder - what incremental i can tell, so better to miss this part

As in banking circles and people who have worked there (this should be interesting)

  • A billionaire promoter (who was not a customer of YB) mentioned in a freewheeling chat about the background due-diligence processes by YB. He said “owner of YB himself inquired about a corporate through telecom, (whose proposal they were considering for lending) and the way he inquired - it means serious business”. (Pl don’t ask me the corporate, lending limits or “serious business” because i was too young to ask him for specifics in a room filled with all my seniors). Interestingly couple of people did not agree with him but didn’t deliberate much as it was a pitch in progress.
  • I hope everyone remembers, that issue which led to carnage in wholesale funded banks due to some RBI diktat in 2013. I remember a guy in my office, who was having decades of years in banking with many private banks (including YB) -said on a crowded table that it’s game over for this bank (after i accidentally told him that i bought the shares earlier during the day). His words made me go back and re-check my back of the envelope calculation for COF - Now its been 2-3 years and i have some 2-3x return.
  • I believe YB had a fair share of WC loans in its lending mix to a large number of small corporate - it is not easy for these corporates to shift to cheaper WC loans offered by some PSBs - as it takes a lot of time and unnecessary kagzi-karwai for sanctions there.
  • I believe 50% of the people were happy working with YB and the rest were not - which is usual for most companies. Life was not a cake-walk for corporate RMs - as they had stiff targets and a lot of time was lost in feeding the MIS. One different aspect which i noticed, was that at YB - the RM who sold the loan was also responsible for some level of credit analysis (might be for more accountability). This is a very crude point, but this was missing in many other banks which i have seen including both public and private banks.
  • Lastly, the best thing (which is a pure fact, for a change) - YB don’t participate in CDR schemes approved by banking consortium. Those schemes were prepared by some of the best minds and are the best fantasy stories, i have ever seen.

I believe i have a partially positive bias towards YB and is fully cognizant of divergent views. Though i don’t track it actively but i’m open to change my mind, if the fact warrants. There have been some temporary, unwarranted issues and wide fluctuations in the valuation multiples in the past which makes this counter a fertile ground for naysayers and opportunist.

Hope it might help :slightly_smiling:

(vaibhav) #217

I am a savings account holder andhave also got my family members’ account opened with YB. No FDs, all the money in savings a/c. No NEFT charges. Good cashback offers on ecom websites. It is as good as any private bank can be.

My cousin is a manager at YB. He says it’s a bank where promoter is a very important figure. He holds YB and Indusind banks’ shares in his PF.

(Vishnu Ch) #218

CONFERENCE CALL - from Capital Markets

Expects to NIM to improve 15-20 bps and CASA 300-500 bps in FY2017

Yes Bank conducted concall on 27 April 2016 to discuss financial performance for the quarter ended March 2016 and the prospects of the bank. Rajat Monga, Senior Group President, Financial Markets & CFO addressed the call:


  • The bank has been exhibiting strong improvement in its retail liabilities. CASA Ratio jumped to 28.1% end March 2016 from 23.1% a year ago, showing a robust 500 bps improvement in one year. SA deposits posted robust growth of 62.3%. Bank expects 300-500 bps CASA ratio improvement each year for next two years.
  • CASA+Retail FDs as % of Total Deposits surged to 54.5% end March 2016, up from 47.9% a year ago.
  • GNPA stood at 0.76% and NNPA was at 0.29% end March 2016.Standard Restructured Advances as a proportion of Gross Advances at 0.53% (Rs 524.0 crore) end March 2016, has declined from 0.67% (Rs 568.3 crore) end December 2015.
  • Fresh slippages of advances stood at Rs 329.34 crore in Q4FY2016, while the recoveries and upgradations were Rs 27.19 crore and write-offs were Rs 111.76 crore.
  • Bank has not conducted any refinancing under 5:25 scheme as well as any strategic debt restructuring (SDR) in FY16.
  • Bank has contained credit Cost at 50 bps for FY16, despite marginal impact of RBI AQR. Bank expects credit cost in the range of 50-70 bps in FY2017. Provision Coverage Ratio (PCR) stands at 62.0% end March 2016.
  • Bank has utilized about 6-7 bps of floating provisions in 4QFY16 for provisioning against AQR related slippages. The outstanding floating provisions stand at 0.3% of total loans.
  • Security Receipts (SRs) eased to 0.20% (Rs 199.4 crore) of Gross Advances end March 2016, down from 0.25% (Rs 212.4 crore) end December 2015. The bank has sold one account to an Asset Reconstruction company for debt aggregation to facilitate resolution across lenders. The account was part of Standard Restructured advances book as on December 2015. Further, during the quarter, the Bank recovered its entire exposure from one account that was sold to ARC in the past, resulting in net reduction in SRs outstanding.
  • Bank has posted strong 30% loan growth for FY2016, driven by both retail as well as corporate segments. Bank is targeting to raise the non-corporate (retail+MSME+business banking) share in the loan book to 45% in next 2-3 years from 35% as end March 2016.
  • Bank has improved its NIM to 3.4% in FY2016 from 3.2% in FY2015. Bank expects CASA ratio and asset mix improvement to prop up NIMs by 15-20 bps in FY2017.
  • Bank is ready to launch its credit cards business in Q1FY17.
  • Bank has sharply expanded its branch network adding 110 branches in Q4FY2016 raising the branch count to 860 branches end March 2016. Bank proposes improve branch network by 20% every year. Bank has also improved its head count to 15000 employees end March 2016.


Any idea what will be the book value after one billion dollar share sale

(Abhishek Basumallick) #220

Highlights of Concall Q1 2017 (Capital market):

Economy is progressing well, offering new opportunities. Bank expects GDP growth to accelerate to 8.1% in FY2017 from 7.5% for last two years.

Bank is expecting repo rate cut of 25-50 bps from the Reserve Bank of India in rest of FY2017.
The bank has received SEBI approval to start Asset Management Company, which is likely to be operational by next financial year.

The bank has recorded trading gains of Rs 120 crore in Q1FY17.
Presently, about 6-7% of total loans are on MCLR. As per the bank, the shift of the loan book to MCLR system would happen in next three years. The bank is considering reduction in its base rate, while its awaiting for the other large bank to intitate rate cuts.

The MFI book stood at 2% of total loan book, which is growing at strong pace of 30% end June 2016.
Consumer banking segment currently offers eight products - commercial vehicles, cars, construction equipment, inventory, healthcare, housing, loan against property, personal loans. Consumer banking share stands at 9.4% of the total loan book, while its share is expected to increase to 20-25% in next 3-4 years.

The overall retail and business banking loan book share is expected to increase to 45% in next 3-4 years from existing 32.5% end June 2016.

Advances growth is expected to be in the range of mid to high 20’s.

Increase in telecom exposure in Q1FY2017, was due to underwriting of bond issuance amounting to Rs 1500 crore.

About 75% of the corporate exposure was towards A and above rated accounts.

Average cost on savings deposits stands at 6.5%, which is expected to ease further as bank may reduce saving deposit rates.

CASA deposits ratio of the bank has further improved to 29.4, driven by strong saving account deposits growth. Bank expects to improve CASA ratio to 40% in next 3-4 years.

Bank expects margins improvement of 10-15 bps in FY17 from 3.4% in FY16, while expects to raise margins above 4% in next 3-4 years with higher CASA ratio, rising share of retail loans, and capital raising.

Fresh slippages of advances stood at Rs 299.62 crore, while bank has recorded recoveries and upgradations of Rs 185.67 crore and conducted write-offs of Rs 18.38 crore in Q1FY2017.

There was no fresh restructuring of advances in Q1FY2017. Restructured assets book was flat on sequential basis at Rs 522.90 crore (0.49% of the advances) at end June 2016, while dipped from Rs 567.10 crore (0.71%) a year ago.

The securities receipts on the banks book eased to 0.19% at end June 2016. There was no fresh sale to ARC during the quarter.

There was no 5/25 refinancing in Q1FY2017.

Bank has exposure one account under SDR with exposure of Rs 34 crore, amounting to 3 bps of loan book.

The contingency provision stands at 30 bps of loan book at end June 2016.

The SMA-2 category for the bank would be around 1-2%.

The provisions stand at Rs 206 crore in Q1FY2017, of which NPA provisions were Rs 95 crore, counter cyclical provisions Rs 70 crore and standard asset provisions of Rs 40 crore.

The credit cost stood at 15 bps in Q1FY2017. Bank has maintained credit cost guidance of 50-70 bps for FY2017.

The credit substitutes book stands at Rs 11000 crore at end June 2016.

(Sandeep) #222

Any body has any idea about the current QIB fiasco? what does it say about the quality of the Management?

(MG) #223

My limited understanding - Do not read much!
Raising money from market is a tricky issue and stuff gets complicated - what happened with Yes bank is one of the worst one can imagine.
About management with regards to this specific issue - they were trying to take advantage of superb valuation, timing it to perfection and maximizing the proceeds - which any rational organism will do.
What they did wrong was - they just went a bit overboard and aggressive with the flow.
Yes it could have been handled better, both in terms of pre-QIP announcement (read interviews) and even the reasoning post QIP failure was kinda funny - given it is coming from ~US$ 9-10 billion organisation employing the best legal brains and bulge bracket investment banks.

Hope they have learnt there lesson (as the founder has said a short-while ago) and will approach it better next time.