@Aarti maam you actually ended up being right but I am not a 100% wrong I started posting here when the price was 12 to 13 and it went up to 25. Yes but I believed it can go to 35 to 50 which as on date looks tough
I have recently developed the understanding that how important is cost to income and the provisioning for SR was also something new for me. I think next year is also going to be tough form them and they wont be able to generate high incremental revenue.
I would like to exit this stock now. Learnt a lot, Accepted my mistake and very important did not loose money.
I think even in IDFC case most of the people realized C&I is high and excited despite in the beginning expecting multi fold returns.
In SIB case Q3 was a result was a surprise for most of them as SR related provisioning was there.
So if this can happen with experienced investors then I am pretty new and fell for it.
My thesis was they can grow book value at a faster rate than earnings which is actually happening but what I could not see was there has to be some earnings to get that 1.7 or 2PB which as of now I donāt see
Atleast for next 3yrs I donāt see a turn around and as the get close to turning around they will have to dilute further. But as many say it is going to go bankrupt or is a fraud I donāt agree with that the price as per me should be in this range going forward as well
Market is a great place to learnā¦ you have at least not lost money in the procesā¦
Yes bank can never make money as their cost of deposits are very highā¦ and on that a huge employee costā¦ if you see banks which have given good returns have reduced cost through increasing CASA balances and lowering of deposit costs. and at same time use technology to keep employee costs low. Yes bank is not doing either of theseā¦ they will not be able to alsoā¦ Deposit rates have to be higher so that people put money in yes bank. people will not make yes bank their primary account so CASA will never pick up and lasts employee costs are high which every one can seeā¦ and to top it all provisions for bad loans still high.
trust lost in a bank can never be recoveredā¦ it has happened many times in the pastā¦
Disclosure - sold at huge lossesā¦ have written it off and moved on.
Congrats, all of your stocks were high growing ones. Yes bank eventually turned dud (which you eventually sold in 2014 itself anyway), but the rest were miltibaggers!!
Eventually, we did see yes bank and indusind had similar kind of problems. Run by family, giving aggresive loans (and to promoter friends).
What were your learnings in the banking sector?
Have a few questions for valuepickr community at large?
How do you view the current environment of aggresive unsecured loans to retail? Do we have some case studies of some countries where it succeeded or backfired?
How do you view the effort by yes bank to increase casa? Will it work?
Yes bank has one of the best brand recognition? But does this actually help considering its a bit in negative side.
If I may, hereās an alternative macro perspective with a bit of scuttlebutt:
Yes bank has one of the best tech architecture across Indian banking system that I know of. They started to build APIs at least 5 years ago and they were working with multiple small fintechs at that time . Their investor presentation says that they process 40% of all digital payments in India !
The brand recall is good and even though the bank has gone through issues, there was never a run on the bank. I, eg , continue to run one of my primary account with them
I own one of their cards and have seen that their fraud management practices are better than any I have seen
Their CASA has not done well - donāt know the underlying reasons but I donāt think that over a period this is not a solvable issue . ( most of you may recall, yes bank was the first bank ever to give 7% interest on savings deposits)
SBI parentage is actually good because sbi itself has done a bit of transformation (someone one canāt say about any other psu bank including bank of Baroda )
Their Npa issue is behind them and with retail franchise now 40%+, the NIMs and ROA should improve
And I guess they have done well on SME banking as well
I would tend to think that over a 3-5 year period, there could be a significant growth possibility.
Ignoring asset quality and reverse calculating- just based on Earnings and multiple at 20x PE (HDFC bank is 20x) the PAT should be 2,500 cr. Is this even possible!!
if you go for lower multiple of 15 or 10x then it become even more impossible
everybody know asset quality is not great. Yes bank pricing is higher so riskier borrowers or those not getting loan elsewhere will borrow from yes bank
just fyi UPI payments and credit cards are loss making
After all of this if by some miracle goes to 24 again you are making 40% return. Analysts have given target of 2,200 to HDFC bank which is 30% from current prices.
Well P/B is 1.3 which was sitting at 2.5 3 years ago when the book had a lot more mess in it. And HDFCās P/B is nearly 4. And if Iām not mistaken , it was HDFC whose CIO had to lose his job due to app issueā¦. So, I guess thereās some story here.
Again, itās not a recommendation and everyone has their own risk appetite
Summary:
Profit: 10.26% YoY rise amounting to 342.5 crore (314.3 crore in Q1FY23)
GNPA: Significantly dropped from 13.4% a year ago to 2% (Because of bad loan transfer to JC Flower?)
NIM: 2.5% up by 10% YoY
Deposits: 13.5% increase YoY
CASA ratio: Dropped to 29.4 from 30.8 (only negative metric)
So they now have about 1400 CR in PAT on an annualised basis - thatās closer to 2500 Cr than it was last quarter. Point being everyone knows the bank is rising from the ashes. Which is why there is an opportunity for those with patience may end up being rewarded with asymmetrical returns. The market always rewards outlook into the future. And for reasons stated earlier, IT framework, user experience and even the shift into retail lending may all add up to a stronger outlook. The HDFC online user experience is far short of Yes platform. Disclosure - Invested for long.
Yes bank investors are the most optimistic lot in the marketā¦ hoping for something not achievable.
ICICI direct has given target of 14. After many more who have given targets of 14/13/11/10.
Do not listen to brokerages as they have their own axe to grind. Agreed that Yes Bank has huge equity of 2900 Cr shares. Remember that the bank has very big branch network PAN India ā¦ If bank manages to perform better, then it can be a good turnaround story. Only time will tell; and patience will be rewarded.
again terrible results !! its not going to improveā¦ business model failure. once stress in retail portfolio happens - which will happen to many retail lenders- yes bank can go back into lossesā¦ high risk low return stock.
The media folks donāt think or analyse before ācreatingā news from regulatory filings.
HDFC Bank now is the promoter of HDFC AMC and HDFC Life.
Whenever an institutional investor such as life insurance companies and mutual funds want to increase holding in a bank, they have to prematurely apply to the RBI for approval.
This is exactly that - when HDFC Life or AMC want to acquire more stake in Yes Bank or IndusInd Bank - essentially as the owner of these institutional investors HDFC Bank (parent) must apply for RBI permission.
Remember when there was hurrah around LIC approval to own upto 10% of HDFC Bank. LIC buying the dip, bla bla bla. LIC doubling stake in HDFC Bankā¦
Focus on what matters folks - lots of noise around everywhere.
I think this could be another reason for the recent rally
Clarification from Yes bank
āYes Bank LeRemitt in pact to enable smooth cross border transactions for MSMEsā.
"In this regard, the Bank would like to clarify that the news regarding the Bankās tie-up with
LeRemitt, a fintech start-up is in the normal course of business of the Bank to enable Digital
solutioning for the MSME customers of the Bank. This arrangement is currently at a nascent
stage and has absolutely no material impact on the business volumes or revenues of the Bank. "
I have a theory and i beleive this holds true for Yes bank, since yes bank saga has already occured, everyoneās eyes are on yes bank so the next saga wouldnāt be under Yes Bank because it has caught the attraction of every stakeholder and people are very conservative about yes bank so even if a leaf of any wrong happening blows in yes bank it will come to everyoneās eyes immediately because people are looking so closely at Yes bank without blinking their eyes, so I beleive next Yes bank saga wouldnāt happen in Yes bank. āItās something like police keeping an eye on older thieves but the stealer is someone newā
And this doesnāt mean that everything has been fixed in this bank, there are lot of things yet to get fixed, like their consumer side mobile banking app sucks despite the fact that they are the technology providers to many fintechs.
