YES Bank Q4 results preview: Here're earnings estimates by 4 domestic brokerages

YES Bank, the most widely owned private lender, will announce earnings for the period ended on March 31, 2023 on Saturday, April 22. The troubled private bank has been on the radar of investors recently, and will continue to hog limelight even after its Q4 earnings.

Analysts tracking the stock believe that YES Bank may report a mixed set of numbers in the March 2023 quarter as net profit may rise manifold on a quarter-on-quarter (QoQ) basis due to lower base, while net interest income (NIIs) and net interest margins (NIMs) may take a hit. However, experts see a decent growth on a year-on-year (YoY) basis.

According to the analysts, asset quality, provisioning in the balance sheet, management commentary after lock-in expiry and operational efficiency highlighted by pre-provision operating profit (PPOP) will be the main factors to watch out for in the coming quarters.

According to Nuvama Institutional Equities, higher cost of funds (CoF) will lead to lower NIM and NII. Yes Bank's loan growth has risen 11.3 per cent YoY and 5.2 per cent QoQ to Rs 2,01,500 crore. It also expects YES Bank's provisions to drop 52.6 per cent YoY to Rs 400 crore, but may increase 47.6 per cent YoY.

Nuvama pegs its NIIs at Rs 19,300 crore, up 6.1 per cent YoY but 2 per cent QoQ. Its PPOP is seen at Rs 2,310 crore, up 5.2 per cent YoY but down 10.8 per cent QoQ. YES Bank may report a net profit at Rs 310 crore, about 503.3 per cent up QoQ as it reported a PAT at Rs 50 crore in the December 2022 quarter.

Emkay Global sees YES Bank’s profit falling 36.9 per cent YoY to Rs 231.90 crore on a 14.2 per cent YoY rise in NII at Rs 2,077.40 crore. It sees PPOP for YES Bank at Rs 901.80 crore, up 16.5 per cent YoY. The brokerage sees NIMs at 2.5 per cent.

"We anticipate better growth and some normalisation of credit cost to increase profits on a QoQ basis. Slippages are expected to moderate in comparison to Q3 levels," Emkay said.

YES Bank shares were owned by more than 50.57 lakh shareholders as of March 2023 quarter. At the end of December 2022 quarter, its shareholders' number stood at 48 lakh, but this increased as the mandatory lock-in of three years expired in mid-March 2023.

JM Financial sees its NIIs rising 21.7 per cent YoY and 12.4 per cent QoQ to Rs 2,215.1 crore, but its PPOP may fall 6.7 per cent QoQ to Rs 852.4 crore in the Q4FY23. The brokerage pegs the PAT at Rs 405 crore, rising 686.6 per cent on a sequential basis. PPOP and PAT may post double digit growth on a yearly comparison.

YES Bank's loans grew 13 per cent YoY to Rs 2,046 billion and its deposits were up 10.6 per cent YoY to Rs 2,180 billion, said JM Financial. It sees its NIMs at 2.7 per cent, best in the last eight quarters.

Another brokerage firm Kotak Institutional Equities expects NII to grow 6 per cent YoY reflecting the underlying business growth. Business momentum is gaining traction across retail and MSME segments but overall loan growth to be lower than industry average at 11 per cent YoY. Deposit growth at 11 per cent is meeting the business requirements but has significantly decelerated in recent years.

"We expect NIM QoQ at 2.5 per cent, with revenue growth pressure to remain high especially led by weak treasury income. We should have traction on recovery and upgrades this quarter but the impact on earnings is likely to be difficult to forecast given the nature of provisioning policies likely to be adopted and the recovery rates recorded on these transactions," Kotak said.

Kotak Institutional Equities has given YES Bank a 'reduce' rating with a fair value at Rs 16, while JM Financial has 'hold' rating with the same target price. However, latest reports post Q4 earnings are awaited by the investors.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)

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