YES Bank shares at Rs 16.50? What Nomura says post Q4 update

YES Bank’s provisional loan book for the March quarter grew 14 per cent year-on-year and 5 per cent sequentially, adjusting for a reverse repo balance of Rs 3,100 crore in the base quarter of Q4FY23, Nomura India noted. On a reported balance sheet basis, loan growth for YES Bank Ltd stood at 12 per cent YoY, the foreign brokerage added.

Commenting on its quarterly performance, Nomura India said YES Bank's deposit growth was strong at 22.5 per cent YoY and 10 per cent sequentially led by robust growth of 23 per cent YoY (15 per cent sequentially) in CASA deposits. As a result, CASA ratio improved by 120 basis points sequentially to 30.9 per cent.

Nomura India said YES Bank's credit-to-deposit ratio moderated to 86 per cent against 90 per cent in the December quarter. Liquidity Coverage Ratio (LCR) came in at 116 per cent against 118 per cent in Q3FY24, adding that it would await further details from 4QFY24 results.

For now, the broking firm has retained its target price of Rs 16.50 on YES Bank shares, keeping its neutral rating intact.

"We expect YES Bank to deliver RoA of 0.5 per cent/0.8 per cent and RoE of 4.5 per cent/7.5 per cent in FY25F/FY26F. YES Bank’s return profile, though on an improving trajectory, is significantly lower than peers’. Further, YES Bank trades at 1.6 times 1-year-forward. BVPS, which we believe adequately captures the positives. We maintain our Neutral rating," Nomura India said.

Unlike the traditionally strong fourth quarter, Elara Securities said the March quarter will be relatively soft for the banking sector, characterised by NIM pressure, steady loan growth but softer deposit growth, and cost pressures with the impending impact of wage hikes & pension provision for a few.

"That said, lower credit cost and better recovery trends (recovery from written off) should support earnings. Among our coverage universe, we expect PSU banks to report better earnings growth than private ones, led by lower credit cost. We expect earnings discussions to be dominated by NIM and growth outcomes," it said.