Yes Bank - Set on High Growth Trajectory; Result Update Q2FY15 :: Edelweiss

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Yes Bank continues to move from strength to strength, aptly reflected in its Q2FY15 performance – PAT moved up 30% YoY, which was commendable in the backdrop of INR500mn provision for counter-cyclical buffer (adjusting for which growth would have been upward of 40%). Core operating performance continued to impress with NII rising 27% YoY on stronger 30% YoY loan growth and NIMs expansion of 20bps to 3.2%. Asset quality continued to hold forth (stress asset <60bps adequate="" anchored="" and="" bank="" believe="" benign="" best="" bullish="" business="" by="" capital="" capitalise="" cycle="" despite="" due="" emerging="" engine="" fuel="" growth="" improving="" is="" it.="" macros.="" model="" on="" opportunities="" our="" p="" perceived="" placed="" rates="" reduce="" skepticism="" stance="" strengthened="" surrounding="" the="" to="" volatile="" volatility="" we="" which="" will="">

Core operating performance continues to impress

NII growth came in healthy (up 27% YoY) on higher loan growth and NIMs expansion. During the quarter, loan growth tilted towards the corporate book, though focus remains on building granularity. Given management’s diligent efforts, branch banking origination will start forming a meaningful slice of the overall asset pie - expects branch banking to contribute 30% to overall book over next 3 years.

Strengthened business model: Structural levers to curtail volatility

Yes Bank, contrary to popular perception, emerged unscathed from the previous down cycle (stress asset portfolio < 60bps). In the current leg, we perceive risks to be lower on: (a) strengthened model (retail to make a mark); (b) diversified liability franchise; and (c) fee income granularity (which will contain volatility).

LINK

https://www.edelweiss.in/research/Yes-Bank--Set-on-High-Growth-Trajectory;-Result-Update-Q2FY15/27407.html