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Yes Bank began operations in May 2004. Its promoters, who established Rabo India Finance
as a leading investment bank in India, have the distinction of obtaining RBI's only Greenfield
banking license in the past decade. Yes Bank has built a strong management team, with the
leaders of each of its business units being picked from reputed foreign banks. It is now a
"full service" commercial bank with 171 branches and a balance sheet of Rs518b. It aims to
scale up its branch network to 250, with a CASA ratio of ~25% by FY12 (currently 10.1%).
Recent Developments:
Yes Bank reported PAT growth of 52% YoY in 3QFY11 to Rs1.9b (in line with our estimate),
driven by loan growth of 66% YoY & 2.5% QoQ. NIM declined 20bp QoQ to 2.8%. Increase
mix of investments in total assets and lower repricing benefit on investment portfolio
resulted in drop in NIMs. Overall deposits grew 79% YoY (down 1.4% QoQ), CASA deposits
grew 81% YoY (flat QoQ). CASA ratio was marginally up at 10.2%.
Asset quality was stable with GNPA ratio at 23bp and Net NPA ratio at 6bp. Specific loan
loss coverage ratio stood at 76% v/s 75% in 1QFY11 (total loan loss coverage stood at 283%
vs 299% a quarter ago). Management has reiterated its guidance of loan growth of ~60%
in FY11 and deposits by ~70%. We model loan growth of 55% in FY11. Strong growth,
proven execution capabilities, diversified fee income and superior return ratios are the key
positives for Yes Bank.
Valuation and view:
Strong growth, proven execution capabilities, diversified fee income and superior return
ratios are the key positives for Yes Bank. We expect Yes Bank to report EPS of Rs21 and Rs28
in FY11 and FY12 respectively. BV will be Rs110 and Rs135. Return ratios will be strong at
1.4-1.5% over FY11-13 and RoE is expected to be superior at 21%+ over FY11-13.
While reported CAR stood at 18.2%, Tier I ratio is at 10.4% (came down from 12.9% as of
FY10). With the growth rates expected to remain strong, the bank may need to raise capital
in FY12. However, this is not factored in our earnings estimates. We Maintain Buy with
target price of Rs405 (3x FY12 BV).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Yes Bank began operations in May 2004. Its promoters, who established Rabo India Finance
as a leading investment bank in India, have the distinction of obtaining RBI's only Greenfield
banking license in the past decade. Yes Bank has built a strong management team, with the
leaders of each of its business units being picked from reputed foreign banks. It is now a
"full service" commercial bank with 171 branches and a balance sheet of Rs518b. It aims to
scale up its branch network to 250, with a CASA ratio of ~25% by FY12 (currently 10.1%).
Recent Developments:
Yes Bank reported PAT growth of 52% YoY in 3QFY11 to Rs1.9b (in line with our estimate),
driven by loan growth of 66% YoY & 2.5% QoQ. NIM declined 20bp QoQ to 2.8%. Increase
mix of investments in total assets and lower repricing benefit on investment portfolio
resulted in drop in NIMs. Overall deposits grew 79% YoY (down 1.4% QoQ), CASA deposits
grew 81% YoY (flat QoQ). CASA ratio was marginally up at 10.2%.
Asset quality was stable with GNPA ratio at 23bp and Net NPA ratio at 6bp. Specific loan
loss coverage ratio stood at 76% v/s 75% in 1QFY11 (total loan loss coverage stood at 283%
vs 299% a quarter ago). Management has reiterated its guidance of loan growth of ~60%
in FY11 and deposits by ~70%. We model loan growth of 55% in FY11. Strong growth,
proven execution capabilities, diversified fee income and superior return ratios are the key
positives for Yes Bank.
Valuation and view:
Strong growth, proven execution capabilities, diversified fee income and superior return
ratios are the key positives for Yes Bank. We expect Yes Bank to report EPS of Rs21 and Rs28
in FY11 and FY12 respectively. BV will be Rs110 and Rs135. Return ratios will be strong at
1.4-1.5% over FY11-13 and RoE is expected to be superior at 21%+ over FY11-13.
While reported CAR stood at 18.2%, Tier I ratio is at 10.4% (came down from 12.9% as of
FY10). With the growth rates expected to remain strong, the bank may need to raise capital
in FY12. However, this is not factored in our earnings estimates. We Maintain Buy with
target price of Rs405 (3x FY12 BV).
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