YES Bank shares in focus after less-than-expected Q2 results

Shares of YES Bank Ltd will be in focus on Monday morning after the private lender's September quarter results. The bank this past weekend reported a profit of Rs 225 crore for the second quarter, up 47.4 per cent YoY, helped by other income. Emkay Global in its results review had anticipated profit figure at Rs 333.80 crore. YES Bank said its net interest income (NII) was down 3.3 per cent YoY at Rs 1,925 crore. Emkay Global had anticipated NII growing 0.9 per cent YoY at Rs 1,974 crore. Net interest margin (NIM) for YES Bank came in at 2.3 per cent, down  20 basis points sequentially. This was in line with expectations.

Kotak Securities, which has a 'Reduce' rating and a fair value of Rs 17 on the stock, said: "We have revised our earnings downward to reflect a possible slower progression in NII growth. The bank has significantly underperformed its peers, but we are still not confident if the risks are fully captured in the stock price. The RoE improvement cycle is likely to take more than a few years, and we would probably need the stock to be lower than current levels to turn positive."

In its earnings presentation, YES Bank's Managing Director & CEO, Prashant Kumar, said that the lender managed to deliver yearly expansion in both operating profitability and net profitability, despite a challenging environment with respect to interest rates, deposit growth slowdown and tightening liquidity. 

"At the same time, the fortification of Balance Sheet from Asset Quality standpoint continues, supported by robust redemptions from the Security Receipts. The bank has also been consistently putting together the key pieces of the puzzle as it accelerates along its path of profitability expansion. Few such highlights during the quarter included the launch of our next gen mobile banking app ‘iris by YES BANK’, setup of a dedicated Strategy & Transformation Office; and further strengthening of our Management Team through two key senior level appointments - Head of Wholesale Banking and Head of Strategy & Transformation," Kumar said.

During the reporting quarter, net advances at bank grew 8.7 per cent YoY to Rs 2,09,106 crore. YES Bank said advances growth stood at 11.2 per cent YoY.  adjusted for the ARC Transaction. Total deposits for the quarter came in at Rs 2,34,360 Cr, up 17.2 per cent YoY. Excluding CDs, deposits growth stood at 18.3 per cent YoY, the private lender said. YES Bank's CASA ratio came in at 29.4 per cent  against 31 per cent YoY.

Resolution momentum continues to be strong with recoveries & upgrades for Q2 FY24 coming in at Rs 1,352 crore. H1FY24 cumulative recoveries and upgrades stood at Rs 2,553 crore, the bank said.

The bank's asset quality stayed steady, with the gross non-performing asset (NPA) ratio holding steady at 2 per cent, and the Net NPA ratio at 0.9 per cent. In absolute figures, gross NPAs stood at Rs 4,319.03 crore as of September 30. Net NPA for the period amounted to Rs 2,7419.11 crore.

 

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