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Yes Bank
For 2QFY2012, Yes Bank reported a strong performance with net profit
growth of 33.3% yoy (8.8% qoq) to `235cr, above our estimate of `216cr.
Profit growth was driven by a 10bp increment in NIM and strong non-interest
income, which registered growth of 63.4% yoy. Asset quality continued to be
stable with low gross NPA and net NPA ratios of 0.3% and 0.04%, respectively.
The bank continued with its strategy of slower balance sheet growth during
2QFY2012 to reduce the proportion of wholesale-based loans in its portfolio
and to maintain its NIM, owing to a weak funding profile in a high interest rate
environment. Advances for the bank grew by 12.7% yoy (3.3% qoq), while
deposits grew by 10.2% yoy (1.1% qoq). CASA deposits accretion remained
healthy at 19.7% yoy (almost flat sequentially). Due to the relative slower
growth in deposits, the bank managed to increase its CASA ratio by 10bp to
11.0%. Reported NIM rose by 10bp to 2.9%, as yield on advances rose by
60bp to 12.2%. Higher yields on advances were supported by the 51.3% qoq
increase in credit substitutes to `6,566cr. Consequently, NII posted healthy
growth of 23.1% yoy. Asset quality of the bank continued to be in a sweet spot,
with best-in-the-industry gross and net NPA ratios of 0.3% and 0.04%,
respectively. The provision coverage ratio (excluding technical write-offs),
however, declined from 95.2% in 1QFY2012 to 80.2% in 2QFY2012. Branch
expansion plans were on track, with addition of 50 branches to take the
network to 305 branches.
We remain positive on the bank, considering the strong branch expansion in
the last 18 months. In fact, the bank has doubled its branch network over this
period. Also, we believe that we are very close to the peak of the current
interest rate cycle; and as liquidity has relatively improved compared to the last
few quarters, the environment is expected to be relatively more conducive for
banks such as Yes Bank. At the CMP, the stock is trading at 1.8x FY2013E
ABV. We value the stock at 2.1x FY2013 ABV and, hence, we maintain
Accumulate on the stock with a target price of `321.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Yes Bank
For 2QFY2012, Yes Bank reported a strong performance with net profit
growth of 33.3% yoy (8.8% qoq) to `235cr, above our estimate of `216cr.
Profit growth was driven by a 10bp increment in NIM and strong non-interest
income, which registered growth of 63.4% yoy. Asset quality continued to be
stable with low gross NPA and net NPA ratios of 0.3% and 0.04%, respectively.
The bank continued with its strategy of slower balance sheet growth during
2QFY2012 to reduce the proportion of wholesale-based loans in its portfolio
and to maintain its NIM, owing to a weak funding profile in a high interest rate
environment. Advances for the bank grew by 12.7% yoy (3.3% qoq), while
deposits grew by 10.2% yoy (1.1% qoq). CASA deposits accretion remained
healthy at 19.7% yoy (almost flat sequentially). Due to the relative slower
growth in deposits, the bank managed to increase its CASA ratio by 10bp to
11.0%. Reported NIM rose by 10bp to 2.9%, as yield on advances rose by
60bp to 12.2%. Higher yields on advances were supported by the 51.3% qoq
increase in credit substitutes to `6,566cr. Consequently, NII posted healthy
growth of 23.1% yoy. Asset quality of the bank continued to be in a sweet spot,
with best-in-the-industry gross and net NPA ratios of 0.3% and 0.04%,
respectively. The provision coverage ratio (excluding technical write-offs),
however, declined from 95.2% in 1QFY2012 to 80.2% in 2QFY2012. Branch
expansion plans were on track, with addition of 50 branches to take the
network to 305 branches.
We remain positive on the bank, considering the strong branch expansion in
the last 18 months. In fact, the bank has doubled its branch network over this
period. Also, we believe that we are very close to the peak of the current
interest rate cycle; and as liquidity has relatively improved compared to the last
few quarters, the environment is expected to be relatively more conducive for
banks such as Yes Bank. At the CMP, the stock is trading at 1.8x FY2013E
ABV. We value the stock at 2.1x FY2013 ABV and, hence, we maintain
Accumulate on the stock with a target price of `321.
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