YES Bank shares fall 4% on Citi's negative watch; Axis Bank also in focus
In the case of YES bank, the lender declined 3.87 per cent to hit a low of Rs 21.59 on BSE. Citi suggested a 'Sell' and a target of Rs 22 on the stock.
- Sep 28, 2026,
- Updated Sep 28, 2026 10:47 AM IST
Shares of YES Bank Ltd fell 4 per cent in Monday's trade after foreign brokerage Citi placed the private lender on a 'negative watch' as it assesses the impact of large FCNR(B)-linked inflows on lenders' earnings. Citi, on the other hand, placed Axis Bank Ltd on a "30-day positive catalyst watch" ahead of September quarter results.
In the case of YES bank, the lender declined 3.87 per cent to hit a low of Rs 21.59 on BSE. Citi suggested a 'Sell' and a target of Rs 22 on the stock. Axis Bank also fell amid a broader market selloff, with the stock slipping 0.66 per cent to Rs 1,212 apiece.
"We open a 30-D negative CW on YES expecting RoAs to moderate to 65 bps in 2Q. Not anticipating major recoveries from SRs, we estimate elevated credit costs at 0.6 per cent. We estimate YES will captur $7,358 million under 2 per cent share of overall FCNR mobilization ($2 billion, 6 per cent of deposits), thereby supporting deposit growth of 11 per cent QoQ/18-19 per cent YoY," Citi said.
Assuming a material portion (75 per cent) is leveraged, the overseas book could spike to as much as 5 per cent of advances, Citi said on YES Bank as it built in 8-9 per cent QoQ or 23-24 per cent YoY advances growth. Citi said
NIM pressure of 12-13 bps us expected and tat non-interest income is expected to decline given lower treasury gains and a higher Q1 base from IT refund interest, booked under other income.
"As retail momentum builds and business growth adds associated costs, we expect cost ratios to skew higher 4-5 per cent QoQ growth, with mid-teens YoY growth. Key risks: Supreme Court's judgment on AT-1 bonds in favor of bank," it said.
Citi said about $133 billion of FCNR(B) inflows, equivalent to 4.5 per cent of deposits, to inflate banks’ balance sheets, “2QFY27 is shaping up as the toughest quarter to model, with FCNR(B)/OFCB-linked inflows distorting nearly every reported metric,” it said.
The foreign brokerage expects Axis Bank to deliver a 1.7 per cent return on assets and 16 per cent return on equity as its balance sheet expands, with profit after tax rising 40 per cent YoY.
"While the inflows should boost NII and pre-provision operating profit, the enlarged balance-sheet denominator and thin incremental margins are expected to cause 5-15bps of optical NIM compression," Citi said.
Private banks could eventually report 12-25 per cent NII growth and 15-20 per cent PPOP growth, Citi said.
It sees net interest margin (NIM) declining about 12 bps for YES Bank and ICICI Bank; 10 bps for Kotak Mahindra Bank, 8bps for Axis Bank and 2bps for HDFC Bank Ltd.
Shares of YES Bank Ltd fell 4 per cent in Monday's trade after foreign brokerage Citi placed the private lender on a 'negative watch' as it assesses the impact of large FCNR(B)-linked inflows on lenders' earnings. Citi, on the other hand, placed Axis Bank Ltd on a "30-day positive catalyst watch" ahead of September quarter results.
In the case of YES bank, the lender declined 3.87 per cent to hit a low of Rs 21.59 on BSE. Citi suggested a 'Sell' and a target of Rs 22 on the stock. Axis Bank also fell amid a broader market selloff, with the stock slipping 0.66 per cent to Rs 1,212 apiece.
"We open a 30-D negative CW on YES expecting RoAs to moderate to 65 bps in 2Q. Not anticipating major recoveries from SRs, we estimate elevated credit costs at 0.6 per cent. We estimate YES will captur $7,358 million under 2 per cent share of overall FCNR mobilization ($2 billion, 6 per cent of deposits), thereby supporting deposit growth of 11 per cent QoQ/18-19 per cent YoY," Citi said.
Assuming a material portion (75 per cent) is leveraged, the overseas book could spike to as much as 5 per cent of advances, Citi said on YES Bank as it built in 8-9 per cent QoQ or 23-24 per cent YoY advances growth. Citi said
NIM pressure of 12-13 bps us expected and tat non-interest income is expected to decline given lower treasury gains and a higher Q1 base from IT refund interest, booked under other income.
"As retail momentum builds and business growth adds associated costs, we expect cost ratios to skew higher 4-5 per cent QoQ growth, with mid-teens YoY growth. Key risks: Supreme Court's judgment on AT-1 bonds in favor of bank," it said.
Citi said about $133 billion of FCNR(B) inflows, equivalent to 4.5 per cent of deposits, to inflate banks’ balance sheets, “2QFY27 is shaping up as the toughest quarter to model, with FCNR(B)/OFCB-linked inflows distorting nearly every reported metric,” it said.
The foreign brokerage expects Axis Bank to deliver a 1.7 per cent return on assets and 16 per cent return on equity as its balance sheet expands, with profit after tax rising 40 per cent YoY.
"While the inflows should boost NII and pre-provision operating profit, the enlarged balance-sheet denominator and thin incremental margins are expected to cause 5-15bps of optical NIM compression," Citi said.
Private banks could eventually report 12-25 per cent NII growth and 15-20 per cent PPOP growth, Citi said.
It sees net interest margin (NIM) declining about 12 bps for YES Bank and ICICI Bank; 10 bps for Kotak Mahindra Bank, 8bps for Axis Bank and 2bps for HDFC Bank Ltd.