Yes bank - Yes or No?

Stock Opportunities Not-so-Hidden Gems
2034

I have a theory and i beleive this holds true for Yes bank, since yes bank saga has already occured, everyone’s eyes are on yes bank so the next saga wouldn’t 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 everyone’s eyes immediately because people are looking so closely at Yes bank without blinking their eyes, so I beleive next Yes bank saga wouldn’t happen in Yes bank. “It’s something like police keeping an eye on older thieves but the stealer is someone new”

And this doesn’t 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.

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2035

1QWithCNBCTV18 | #YesBank Q1

:arrow_right:Net Profit Up 47% At Rs 502.4 Cr Vs Rs 342.5 Cr (YoY)
:arrow_right:NII Up 12.2% At Rs 2,244 Cr Vs Rs 1,999.6 Cr (YoY)
:arrow_right:Gross NPA At Rs 3,845 Cr Vs Rs 3,982.6 Cr (QoQ)
:arrow_right:Net NPA At Rs 1,246 Cr Vs Rs 1,330 Cr (QoQ)
:arrow_right:Gross NPA Ratio At 1.7% Vs 1.7% (QoQ)
:arrow_right:Net NPA Ratio At 0.5% Vs 0.6% (QoQ)

1 Like
2036

Yes Bank Ltd. | CMP Rs. 24.8 | M Cap Rs. 77650 Cr | 52 W H/L 33/14

(Nirmal Bang Retail Research)

Result is above expectations owing to improvement in asset quality

Advances came at Rs. 229920 Cr (15% YoY, 0.9% QoQ)

Net Interest Income came at Rs. 2244 Cr vs expectation of Rs. 2225 Cr, YoY Rs. 2000 Cr, QoQ Rs. 2153 Cr

NIM came at 2.4% vs QoQ 2.4%

Non Interest Income came at Rs. 1199 Cr vs YoY Rs. 1141 Cr, QoQ Rs. 1569 Cr

PBP came at Rs. 885 Cr vs expectation of Rs. 895 Cr, YoY Rs. 818 Cr, QoQ Rs. 902 Cr

Provisions came at Rs. 212 Cr vs expectation of Rs. 472 Cr, YoY Rs. 360 Cr, QoQ Rs. 471 Cr

Credit Cost came at 0.4% vs YoY 0.7%, QoQ 0.9%

Adj. PAT came at Rs. 502 Cr vs expectation of Rs. 394 Cr, YoY Rs. 343 Cr, QoQ Rs. 452 Cr

Gross NPA came at Rs. 3845 Cr vs QoQ Rs. 3983 Cr at 1.7% vs QoQ 1.7%

Net NPA came at Rs. 1246 Cr vs QoQ Rs. 1330 Cr at 0.5% vs QoQ 0.6%

Slippages came at Rs. 1205 Cr vs QoQ Rs. 1356 Cr with slippage ratio of 2.1% vs QoQ 2.38%

Net Stressed Assets (NNPA, Net Rstd, Net SMA, Net other NPA) stood at Rs. 9859.9 Cr vs QoQ Rs. 10560.6 Cr at 4.29% vs QoQ 4.64%

Quarter EPS is Rs. 0.2

Stock is trading at P/E of 21.2x FY25E EPS & 1.7x trailing P/Adj. BV

2037

Yes Bank:
FII holding increased.
Lowest NPA.

2038

DII holding has come down
Yes Bank will go the Vodafone way !!!

2039

It’s not that it has decreased; it’s related to FII. Additionally, comparing Vodafone Idea with Yes Bank is not accurate.

Yes Bank is different; it has a TTM profit of ₹1,455 crore and a YoY profit of ₹1,285 crore. Its ROCE is over 5%.

On the other hand, Vodafone Idea is a consistently loss-making company with a negative ROCE, among other issues.

4 Likes
2040

Summary of Yes Bank Q2 FY25 Investor Concall Highlights:

  • Record Profit Growth: Yes Bank posted a significant quarterly profit of ₹553 crore in Q2 FY25, marking a 146% year-on-year increase and 10% growth from the previous quarter, driven by a strong operating profit and 14% increase in net interest income.
  • Improved CASA Ratio: The bank’s CASA (Current Account Savings Account) ratio reached 32%, reflecting an increase in low-cost deposits that contribute to stable net interest margins and reduced funding costs.
  • Strategic Focus on Retail Growth: Yes Bank is carefully expanding its retail assets, balancing profitability with risk management, particularly due to industry-wide challenges in unsecured retail lending.
  • Enhanced Asset Quality: Asset quality improved with a gross NPA (Non-Performing Assets) ratio decrease to 1.6% from 1.7% in the previous quarter, and a provision coverage ratio of 70%.
  • Commitment to Shareholders: Management reassured investors regarding share price performance and dividend policy, emphasizing their goal of consistent financial performance and optimized returns for stakeholders.
  • Managing Margin Pressures: Despite potential pressure from moderating interest rates, the bank expects stable margins due to well-matched assets and liabilities and plans to reduce SLR (Statutory Liquidity Ratio) and RFR (Risk-Free Rate) security holdings, which have impacted margins.
  • Improved Credit Practices: Yes Bank is enhancing asset quality in unsecured retail lending through stricter underwriting standards and improved collection processes.
  • CASA Growth Strategy: The robust CASA growth is attributed to a focused strategy on service quality, customer engagement, and expanding branch networks.

Overall: Yes Bank’s investor call highlighted strong Q2 results, a proactive approach to industry challenges, and dedication to sustainable growth and profitability.

1 Like
2041

Yes bank todays update:

The bank is giving an update about something it shared earlier regarding the sale of bad loans (NPA Portfolio) to JC Flower ARC in December 2022.

Recently, the bank received ₹161 crores from one specific trust as part of this transaction. After subtracting the value of these assets already on their books, the remaining amount exceeds a certain limit (materiality threshold) set by market regulations.

Since this is considered a significant event based on those rules, the bank is officially disclosing it to the public as required by law.

2 Likes
2042

Summary of the Yes Bank Q3 FY25 Earnings Conference Call:

Overall Performance:

• Yes Bank has shown five consecutive quarters of net profit expansion.

• Achieved a 25% year-over-year (YOY) and 10.6% sequential growth in pre-provisioning operating profits, reaching ₹1,079 crores.

• The pre-provision operating profit as a ratio to average assets improved to 1%.

Key Financial Metrics:

• Net Interest Margin (NIM): Remained flat at 2.4%, sequentially and YOY.

• Reduced high-cost RIFF deposits by over ₹8,000 crores.

• RIFF deposits now constitute 8% of total assets, down from 10.5%-11%.

• Aim: Reduce below 5% in the next two to three years.

• Total deposits: ₹2.77 lakh crores, a 14.6% YOY increase.

• CASA (Current Account Savings Account) and retail term deposits: 62.6% of total deposits.

• Savings account balances: Grew 32% YOY, and current account balances grew 22.1% YOY.

• The CASA ratio improved by nearly 350 basis points over the last four quarters.

• Fee income: ₹1,512 crores, up 26.6% YOY and 7.5% sequentially.

• Operating expenses: ₹2,657 crores, up 13.2% YOY and 0.9% sequentially.

• Cost-to-income ratio: Improved.

Advances and Asset Quality:

• Advances: Grew by 4.1% sequentially and 12.6% YOY.

• Strong growth in the mid-corporate segment, exceeding 25% YOY.

• Retail advances: Flat sequentially and down ~3% YOY due to recalibration for profitability.

• Net NPA (Non-Performing Assets): 0.6% of advances, including the net carrying value of security receipts.

• Security receipts value: ₹233 crores as of December 2024.

• Recoveries and resolutions: ₹1,843 crores for the quarter, totaling ₹4,400 crores over nine months.

• On track to achieve ₹5,000 crores for FY25.

• Retail slippages: Flat quarter-on-quarter; marginal improvement YOY.

• Early delinquencies (31-90 days overdue): Stabilizing across secured and unsecured products.

Strategic Initiatives:

• Launched a super app for businesses called Iris, with over 100 features.

• Yes Pay Next and Yes Pay Business are gaining traction in digital payments.

• Branch network is being leveraged to generate assets and fee-based businesses.

• Focused on profitable growth and recalibrating the retail asset portfolio.

• Efforts underway to further improve the cost-to-income ratio.

Specific Areas of Discussion:

• Credit Cards and Personal Loans:

• Credit card slippages are rising, but the book is growing.

• Personal loan slippages are stabilizing, with slower growth.

• Newer credit card originations are performing better.

• Savings Growth: Exceptional growth in savings, with stable blended costs.

• Security Receipts (SR):

• Outstanding SR: ₹2,400 crores.

• Expected recovery: ₹3,000 crores or more.

• Credit Costs:

• Expected to remain below 50 basis points, targeting around 30 basis points.

• Retail Segment:

• Currently making losses due to branch network costs and higher provisioning.

• Steps being taken to improve profitability.

• Capital Adequacy: Core equity at 13.3%, deemed adequate for growth.

• NIM: Flat at 2.4% despite CASA improvement and RIFF deposit reduction.

• Expected to improve with changes in product mix and credit cost normalization.

Future Outlook:

• Confident in continued growth, profitability, and efficiency improvement.

• Anticipates continued deposit growth.

• Aims to achieve 1% return on assets over the next three years.

• Prepared for any outcome of the Supreme Court case related to AT1 bonds.

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2043

When economy is slowing down banks like Yes Bank will be worst affected as they have aggressively gone into retail lending where delinquencies will be high. if profits are low due to provisioning, credit rating will get affected and then could lead to reduction in deposits…
very difficult times ahead for yes bank…

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2044

Valid concern, Aarti, but Yes Bank seems to be managing these risks proactively.

While retail slippages are a concern, the bank has already recalibrated its retail loan book for profitability. Also, early delinquencies (31-90 days overdue) are stabilizing, which suggests better underwriting practices.

The bank is maintaining a cautious approach by keeping credit costs low (below 50 basis points) while targeting 30 bps. Additionally, recoveries and resolutions have been strong at ₹4,400 crore in 9M FY25, with a target of ₹5,000 crore for the full year.

CASA deposits have improved significantly (350 bps rise in a year), and RIFF deposits (high-cost) have been reduced aggressively. Capital adequacy (Core Equity at 13.3%) remains strong, supporting growth and resilience.

Despite economic concerns, Yes Bank has posted 5 consecutive quarters of net profit expansion and is focused on improving efficiency (cost-to-income ratio) while targeting 1% RoA over the next three years.

Yes, macroeconomic headwinds can impact banks, but Yes Bank is taking strategic steps to mitigate risks rather than blindly expanding.

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2045

what we do not realise is banking is the most leverage sector - as for every rupee of equity there is about Rs. 8 of deposit (which is debt / liability for the bank).
once things go wrong the scale of hit is very bad… yes bank idfc bandhan are very risky banks in a downturn… i would say yes bank is the riskiest…

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2046

this is how banking system works, taking loan from RBI and lend money further to customers.

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