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Yes Bank
Yes Bank posted growth of 51.8% yoy to `191.1cr in Q3FY2011 on account of rising net interest
income due to surge in advance book and sustaining NIMs. The bank’s advances grew 66.3% yoy to
`31,112.2cr and Deposits 79% yoy to `22,038.6cr on the back of strong CASA growth. The bank
reported decline in GNPA and Net NPA to 0.23% and 0.06% in Q3FY2011 respectively. The provision
coverage ratio stands at 76.1% with CAR of 18.2%.
Continued robust growth in Advances and Deposits:
Yes Bank management expects advance growth of 60% for FY2011E and Deposit growth of 70% for
FY2011E . The management expects the asset growth of 35-40% in FY2011-12. We expect the loan
book and deposit book growth to register CAGR of 53% over FY2010-13E.
Liability approach for retail business: The bank intends to grow CASA at a continuous pace of
more than 80%; however, plans to go slow in adding retail assets. The management plans to continue
focus in adding Current account (~85% of total CASA) and expanding Business Banking segment.
Fee income:
Non Interest Income registered a strong growth in 9MFY2011 on the back of exponential growth in
Branch Banking Fees (204% yoy in 9MFY2011). Going ahead, the management expects fee income
growth to be inline with asset growth of 35-40%. We expect fee income to grow at a CAGR of 30%
over FY2010-13E.
Branch Network expansion with increasing cost-income ratio:
The bank is planning to take the branch network to 200 by FY2011E, 250 by June FY2012E, 400 by
June FY2013E and 750 by FY2015E from current network of 185 branches (9MFY2011). In line with
its expansion strategy, the management plans to add 100 employees per month. The operating expenses
of the bank grew 41.6% yoy for 9MFY2011 resulting in a cost to income ratio of 35.6%
(below 40%). Going ahead, due to addition in spoke branch network, the management expects the
cost-income ratio to remain stable. We expect the cost-income ratio to remain in the range of 38-
40% over FY2011-13E.
Stable Asset Quality:
Yes Bank has an overall exposure of 0.97% of the loan book to MFI, 7.6% of loan book to Telecom
and ~23% in Infrastructure and logistic. The management expects the NPAs to remain stable. We
expect going ahead MFI and Infrastructure sector might experience some delinquencies resulting in
increasing slippages. We expect Gross NPA and Net NPA to be at 0.28% and 0.04% respectively in
FY2013E.
Valuation and Outlook
In the rising interest rate scenario concerns regarding growth in loan book and increasing cost of fund
remain which could create pressure on NIMs. At CMP of `293, the stock is trading at P/BV of 1.8x
FY2013E with RoE of ~21% and RoA of ~1.3%.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Yes Bank
Yes Bank posted growth of 51.8% yoy to `191.1cr in Q3FY2011 on account of rising net interest
income due to surge in advance book and sustaining NIMs. The bank’s advances grew 66.3% yoy to
`31,112.2cr and Deposits 79% yoy to `22,038.6cr on the back of strong CASA growth. The bank
reported decline in GNPA and Net NPA to 0.23% and 0.06% in Q3FY2011 respectively. The provision
coverage ratio stands at 76.1% with CAR of 18.2%.
Continued robust growth in Advances and Deposits:
Yes Bank management expects advance growth of 60% for FY2011E and Deposit growth of 70% for
FY2011E . The management expects the asset growth of 35-40% in FY2011-12. We expect the loan
book and deposit book growth to register CAGR of 53% over FY2010-13E.
Liability approach for retail business: The bank intends to grow CASA at a continuous pace of
more than 80%; however, plans to go slow in adding retail assets. The management plans to continue
focus in adding Current account (~85% of total CASA) and expanding Business Banking segment.
Fee income:
Non Interest Income registered a strong growth in 9MFY2011 on the back of exponential growth in
Branch Banking Fees (204% yoy in 9MFY2011). Going ahead, the management expects fee income
growth to be inline with asset growth of 35-40%. We expect fee income to grow at a CAGR of 30%
over FY2010-13E.
Branch Network expansion with increasing cost-income ratio:
June FY2013E and 750 by FY2015E from current network of 185 branches (9MFY2011). In line with
its expansion strategy, the management plans to add 100 employees per month. The operating expenses
of the bank grew 41.6% yoy for 9MFY2011 resulting in a cost to income ratio of 35.6%
(below 40%). Going ahead, due to addition in spoke branch network, the management expects the
cost-income ratio to remain stable. We expect the cost-income ratio to remain in the range of 38-
40% over FY2011-13E.
Stable Asset Quality:
Yes Bank has an overall exposure of 0.97% of the loan book to MFI, 7.6% of loan book to Telecom
and ~23% in Infrastructure and logistic. The management expects the NPAs to remain stable. We
expect going ahead MFI and Infrastructure sector might experience some delinquencies resulting in
increasing slippages. We expect Gross NPA and Net NPA to be at 0.28% and 0.04% respectively in
FY2013E.
Valuation and Outlook
In the rising interest rate scenario concerns regarding growth in loan book and increasing cost of fund
remain which could create pressure on NIMs. At CMP of `293, the stock is trading at P/BV of 1.8x
FY2013E with RoE of ~21% and RoA of ~1.3%.
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