Yes bank


(PP) #141

This is well known - HDFC Bank and Kotak are more the exceptions in the Indian banking game. Well, I am not as sure about Kotak, but HDFC Bank is clearly an outlier.

But then, it is one thing to claim that Yes Bank lends more aggressively - and another thing to claim that the management is hiding / misreporting NPAs.

Aggressive lending doesn’t always convert into NPAs - because of better collaterals, or favorable loan agreements, or lending to group entities with better cash flows, etc etc.

In case of an economic recession/depression, Yes Bank’s books will be in more trouble than those of peers like HDFC. But during normal times, I think Yes Bank’s books tend to be as good as those of HDFC - at least that is the experience so far…


(Kunal shah) #142

everybody knows that yes bank is aggressive lender so nothing new about it. but yes presentation had something new Distribution of Corporate Exposures


(JKS) #143

After today’s horror numbers by Kotak, esp on the NPA front, it is also not ‘kosher’ anymore


(manomagg3) #144

Good number how do I find out how much icici , hdfc and Axis have given to BBB or below
that will clear the comparison about the risk perception of the bank.
just for readers to know the meaning of BBB is
A bond rating assigned to an investment grade debt instrument. A BBB rating reflects an opinion that the issuer has the current capacity to meet its debt obligations but faces more solvency risk than an A-rated issue and less than a BB-rated issue if business, financial, or economic conditions change measurably


(Kunal shah) #145

this is from yes bank’s pres. u have to see pres. of other banks for same( if they provide it).


(vaibhav) #146

To me, the growth that it has shown since inception in 2004 (and the growth in promises) is exceptional. I am investing since -

  • High RoE
  • I very much like Rajat Monga and Rana Kapoor - professional sincere honest
  • Growing CASA %age. Gives cashbacks on snapdeal etc, Sponsor in IPL etc, 7% savings interest for over 3 lac deposit - very high visibility, and so, CASA will grow at very high rate in future as well.
  • Growing retail lending %age
  • Good asset quality, low NPAs and restructured assets
  • Good collaterals for the loans
  • Promoter (Madhu Kapoor) court case is a overplayed drama . All shareholders are firmly behind Rana.
  • ADR listing plans next year. will raise $1bn.
  • Available at very high discount

Disc.: one of my largest holdings


(JKS) #147

Couldn’t agree with you more. We tend to associate some popular stereotyping with a few tags for a few stocks.

  • aggressive ( stereotype - shady accounting)
  • short term fund based is another stereotype ( improving CASA disproves this stereotype)
  • only corp focused ( old tag. No longer true. The whole 7% savings and current theme disproves that)
    Disc. Views are biased since invested

(vaibhav) #148

Couple of points missed above -

  • FII can now invest upto 74% now from upto 49% in the past iirc. That is a huge positive as well.
  • growing branch network. IMO, it is poised to become one of top 3 banks by 2020.

Disc- one of the top holdings, rest all top holdings are in pharma (shilpa, granules, shasun)


(PP) #149

The discount vis-a-vis HDFC Bank is due to 3 reasons, I think…

  • HDFC has scale advantages
  • HDFC has higher CASA
  • HDFC is a more conservative lender

Yes Bank should be able to bridge the first two over the long term.
If Yes Bank also works towards becoming a more conservative lender, then it can bridge the third point as well - However, I haven’t seen any signs that the management is working towards this… Anyone noticed any such signs?

The long-term re-rating depends on working on all these 3 fronts - and I can imagine Yes Bank getting to P/BV of between 4 and 6, over the long-term…


(vaibhav) #150

Kotak and indusind are similar sized banks quoting at twice yes bank’s valuation wrt fy15 bv.

Retail lending and growing casa is a focus area -

(In fact, 45-50%of the new deposits are CASA deposits.


(vaibhav) #151

^ http://www.businessworld.in/finance-banking/yes-bank-targets-larger-share-retail-market#sthash.dhHV8QUM.dpbs


(JKS) #152

No need to compared with industry leading HDFC. Yes bank is still undervalued compared to next tier of Kotak and Indus. Kotak with yday’s results has again proved that no one in India is kosher when it comes to NPA


(PP) #153

That is true…

But, rightly or wrongly, Yes Bank suffers from perception problems… Promoter in-fighting, credit to wayward promoter groups, etc. From a shareholder perspective, I would have liked to see management actively working on fighting these perceptions…


(JKS) #154

Could not agree with you more. Just look at all above posts of mine. I am talking about perceptions and the pot boiler between the kapoors


(Hemant V Bhatia) #155

Rajat Monga, Senior GP, Financial Markets & CFO add the call:Highlights by Capital Mkt
Bank has recorded strong 35% loan book growth, which was well diversified across sectors.
The bank is adding about 1]1.2 lakh customers every quarter, which has shown pick up compared to 80-90 thousand addition in the corresponding quarter last year.Average savings account cost stood at 6.9%. Bank has taken some pricing adjustment and will continue to take further adjustments. Bank has raised the threshold for 7% rate from Rs 1 lakh to Rs 3 lakh. Bank expects SA cost to decline by 20-30 bps per year over next few years.Bank remains positive about margins with the continued focus on raising CASA deposits and retail advances.As per the bank, the subdued transaction banking fees was on account of seasonality, while bank expects a decent growth ahead.
Fresh slippages of advances stood at Rs 74 crore in Q1FY2016.Fresh restructuring was conducted in two road sector accounts due to DCCO postponement on operational challenges. Most of restructured loans done in last few quarters related to the road sector, while bank do not expect further restructuring in road sector.Road sector exposure stands at 1.3% of loans, of which about 50% are operational and 33% are restructured.About 75% of exposures in corporate have both internal & external ratings, while rest 25% have internal rating.Bank has not under taken any refinancing under the 5:25 scheme.
Bank has not conducted any asset sales to ARCs during the quarter, bank is reluctant to sale assets to ARC and do not have any pipeline.Bank expects 25-50 bps rate cut from RBI in current fiscal year.
GDP is expected to improve to 7.8% from 7.3% in last year.During Q1FY16, the Bank maintained monthly average Liquidity Coverage ratio of 76.6% which is well above the regulatory requirement of 60%


(manomagg3) #156

There is everything positive about the bank in the write up
I am surprised that market is discounting the valuation of this strong bank
I have holding in yes bank


(SK) #157

It is wrong to assume that Yes bank is trading at discount to Kotak ,HDFC & Indusind . All theses Banks are primarily retail banks while Yes bank is mainly a wholesale bank.On contrary , Yes bank is trading at premium vis a vis other wholesale banks.Retail banks are trading at premium than wholesale banks due to NPA issues in recent past in corporate segment & other benefits of retail banking.


(vaibhav) #158

What is your criteria for identifying a wholesale lender? Because the retail lending %age for YB is ever increasing (at 32.2% in q1) and they aspire to bring it close to 50% iirc -

“Corporate banking accounted for 67.8 percent of the advances portfolio and retaing banking (including MSME) for 32.2 percent in June quarter. Current & savings account (CASA) deposits grew by 31.2 percent, taking the CASA ratio to 23.4 percent from 22.3 percent year-on-year,” said Yes Bank in its filing.

(Even casa, they see it at 35-40% , NIMs at 4%, in 3-4 yrs time - savings deposits are growing by 45% yoy. See the growth trajectory, casa was 8.x% in 2009)


(vaibhav) #159

Q1 fy16 Comparison between similar sized private banks -
Yes bank - NIM - 3.3% , Net npa - 0.13%, , retail lending - 32.x%,price divided by FY15 book value - 2.95.

IndusInd - NIM -3.68%, net npa - 0.31%, ,retail lending -42% (source - q1 con call notes), p/fy15 bv - 5.06 (fy15 bv was 193 as per profit.ndtv.com)

Yes banks NIM was 2.7%in fy08, 2.9% in fy09…,3% in fy14 and 3.3% now. There is a very strong trend of growing NIM, growing casa and growing retail lending percentage. It would clearly be not appropriate to call it a wholesale lender anymore.


(PP) #160

Yes Bank is clearly in the right direction, by increasing its proportion of retail lending… And also increasing its focus on retail depositors…

I think the market would take a while to re-rate the stock - simply because, the retail lending pedigree of Yes Bank is still unproven…

Only after 3-5 years of retail lending, we would know the quality of that lending - as NPAs typically take a while to surface… So, patience is required here… as the market is probably still not sure of the quality of Yes Bank’s retail business… At least that is what I am guessing…