ValuePickr Forum

Yes bank

Liquid and ultra short term fund

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Nice comment Sir. This is why I always mention that WB and Peter Lynch’s books do immense damage to normal souls. These people are extraordinary geniuses whose work can be only understood by geniuses. Understanding not as understanding the words’ meaning but internalizing what they have told. It is immensely difficult task. As you mentioned, the times too were different.
For normal souls, few technical indicators should be fine to begin with and as they grow in maturity, they can start reading WB and implementing his ideas.

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Hi

Came across this post on linkedin by an ex colleague from YES Bank. Thought it would be helpful for all of us to get a glimpse of the liability landscape.

Regards
Deepak

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sir what do you infer from this graph?

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with due respect, this table is not good enough to make any final conclusion. Few more columns are required like no. of rural/semi-urban/urban branches. YB has majority of branches in big cities/western India where CASA should be high naturally. Secondly, they serve quite a few corporates and they maintain their current accounts. However, this table does tell us that HDFC/Kotal bank are doing reasonably well. Even SBI which has huge no. of branches in the far flung areas is doing ok.

Hi

Q. What is the conclusion we are trying to make?

So do all the other banks. 6 out of the 11 mentioned above have more branches in Metros. RBI classifies branches into 4 types based on population - Metro, Urban, Semi-Urban and Rural. This includes the relatively ‘loved’ KMBL, IndusI & RBL.

So do all the banks. Have a look at the average balances across population groups below. Not just coprorates but key salary accounts.

Q. They are doing reasonably well on what terms? Have a look at the table below.
HDFC has 7% lower Semi urban branches from national average and a 15% lower than the Rural average.
KMBL is 14% more than YBL in metro and same in Rural.

I had earlier this year shared some inputs on this topic in @Yogesh_s 's thread on Indian Banking.

All relevant data points below. Some are slightly old as DBIE doesnt have live data.

No bank is doing social service by opening branches in Rural India. It is a mandate of how branches are to be opened by RBI. All banks including the haloed ones use loopholes in selecting locations. Lets not get into that part as it is a grey area.

My other point is lets make statements with data backing else we can put a disclosure that this is my ‘hunch’ or ‘guesstimate’. Cheers.

Rgds
Deepak

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This is very interesting. Thanks for sharing!

Definitely their retail liability side has improved a lot through the years.Their marketing has been quite aggressive. But going forward I don’t think the same kind of CASA per branch is easily achievable as they have already reached 1000 branches, the most potential areas.Even though their per branch CASA looks good their absolute figures are lower.And I think as they are offering higher interest on savings ,eventhough CA ratio to CASA is higher,their cost of deposits is expected to be higher than most of the banks listed here.

I don’t intend to provide any data since my interest in this stock is only academic. I am trying to interpret whatever you have provided here. My limited points are as follows -

CASA/branch - it is a wrong metric to track since we are comparing apples with oranges here. HDFC is hugely retail focussed while Kotak runs the largest wealth management unit focused on wealthy clients in the cities who typically don’t park funds in CA/SA. Despite that they have higher CASA/branch than Yes Bank. As they expand into hinterland this number can only go down from here.

CASA ratio - Coming to yes bank, they bombard us with marketing on the largest biz channels about high interest rates on CA/SA, open most of the branches in CASA heavy regions of western India/South India and end up having CASA/branch of lower than peers. So we have high branch operational costs, high interest cost CASA ratio of 34%. We need to be aware that these interest rate schemes are running for many years now. I am not data driven but it doesn’t take much to understand that YB’s higher cost 34% CASA is worse than it looks.

My conclusion - IMO, their operational execution seems to be less than optimal so far.

Operational costs per branch per quarter for YB and for IndusInd bank are nearly the same (abt 1.25 cr. Per branch per quarter iirc).

Casa per branch is very good. I see YB ATM at Kashmiri gate metro station for ex., it’s a station where 3 metro lines meet. Gives very good visibility for the brand. Imo, they have done many right things to have the casa n deposits growth that they are having.

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Hi

Understand that your viewpoint is now academic.

On the two points which you mentioned lets invert

  1. CASA/Branch: How are branch managers given targets? Do x amount of CA, y amount of SA, z amount of TD, m amount of a,b and c loans and so on. How are each branches judged be it HDFC or Kotak. Why is an account holder judged by NRV than only his SA account? Why is cross-sell as a target so critical? If given a choice would a bank open branches in rural India (pvt banks is the set I am talking about)?

  2. CASA Ratio: Interest deregulation happened around May-June 2010. YES Bank increased their rates to 7% across any denominated SA value in an account, KMBL to 6% over only 1L of deposit. KMBL went all out with an ATL campaign. YBL didn’t spend a single rupee for over 12 months on this in ATL. Now lets look at the misconception from a data pov of opening branches region wise.
    YBL is actually the second lowest in Southern plus Western region (only IndusI has lower). 57% of KMBL’s branches are in these 2 regions, HDFC & ICICI have 41% and 48% respectively. YBL has historically been very aggressive in the northern region instead and this shows in the below table.

Again my point is without data it is very difficult to conclude.

Rgds
Deepak

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Via - Alpha Ideas blog

Yes Bank has released to the Stock Exchanges the email sent by its legal counsel to the Editorial staff of newspaper Business Standard.

It’s probably the first time in history that a Bank has publicly accused its rivals of sabotage and malafide intent

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Don’t know the truth behind it but blaming a newspaper for its problems is absurd. Best is to let actions do the talking - selection of a CEO with clean image, same with the Board. Recognise NPAs as per RBI guidelines, not as per their own definitions and clean up the books! Maybe be less aggressive and more qualitative in growing the book from now on and improve overall compliance!

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Recently they gave sell call on RBL as well. Every other institute has a buy call on same. Not sure the intentions of Kotak.

Most of the reporting is factual. Only some is opinion/editorial. UBS had a sell call on Yes Bank for so long. Did it have an impact on the stock? No! It was only after fundamental issues came to light that people dumped the shares. Only when those fundamentals improve will the stock recover. Meanwhile RK should think like another RK (Rajesh Khanna) did…“Kuch toh newswaale kahenge…unka kaam hai kehnaa…” and keep on doing his work :wink::blush:

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Kotak securities gave a sell call.

Well if we say that their intentions is bad, any broking house backed by a bank should stop giving calls on peers? Shall, ICICI Securities stop commenting or covering other banks? If they downgrade some bank or upgrade some other, does it mean they want to buy out the bank which they degraded? What about foreign institutional desks? If they downgrade say ICICI Sec… does it mean they want to buy them???

Its a lot of rumor mongering and blame game being played out.

Regarding Yes Bank, there is something that RBI knows and we do not know. Last time when some news paper reported this:

" Yes Bank spokespersons Krunal Mehta and Amit Shah, replying to Mint’s queries, said: “At the very outset, we would like to clarify that any communication exchanges between the bank and its regulator (RBI) are secret, confidential and privileged. Any illegal, unauthorized and improper dissemination of the contents from unofficial sources would force us to take appropriate legal proceedings against you, both under civil and criminal laws.

We therefore fail to understand why your publication is trying to sensationalize and resurface an old story."
"

They threatened Mint of legal action. In past, they threatened UBS for same. I mean is it only business standard which is giving these reports?

There is only one way to put rest to these rumors… tell investors what are the specific issues RBI mentioned which led to exit of RK. Instead of giving answers, they are just playing a blame game and trying to hide the real reasons…

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Yes has become NO :grinning:

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Media says " Multiple Sources " and kotak denied the news - share price is still up 8.5% - I think they are diverting yes bank news to kotak - somehow the whole media houses favorable to specific stocks - Did Berkshire Hathway invest in overvalued compines in past on listed space ? News seems to be fake news and know days media like a local WhatsApp groups - broadcast or publish whatever they hear or like or favour Todo ? May be I start to believe what Yes bank told few days back - " Media is favourable to specific entities " .

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