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In fine fettle
YESB’s Q1FY12 results were largely in line with our estimates. Advances growth
moderated to 26% YoY (a 4% dip QoQ) due to focus on balance sheet consolidation.
Deposits also declined QoQ as the bank repaid some of its bulk deposits. While
CASA deposits remained flat, they were up 59bps QoQ in percentage terms to
10.9%. NIMs were maintained at 2.8%. PAT was above our estimates, but boosted
by provision write-backs of Rs 150mn. Asset quality remained healthy with
GNPA/NNPA/restructured assets at 0.17%/0.01%/0.26%. We expect YESB to post a
strong operating performance marked by a 33%/26% CAGR in NII/PAT over
FY11–13E and ROEs at 22%.
Focus on balance sheet consolidation: Deposits were lower 5% QoQ due to decline
in deposits from wholesale banking, government-backed institutions and the
institutional segment (Fig 5). CASA/retail deposits grew by 0.4%/17% QoQ. The
bank opened 41 branches during the quarter and now plans to accelerate its ATM
openings and product launches to boost its retail deposit base. To this end, the bank
has even hired a few senior employees from rival banks. While advances fell by 4%
QoQ, the asset mix remained largely stable (Fig 4).
Fee income in-line; C/I ratio stable: Non-interest income grew by 15% YoY on
higher transaction income (Fig 5). Financial advisory income was up 9% YoY.
Operating expenses increased 24% YoY as employee expenses jumped 35% YoY.
The C/I ratio was stable at 37.4%.
Asset quality stays healthy: GNPA/NNPA improved further and specific
provisioning increased to 95%. Total restructured assets stood at only 0.4%.
Provisions were low at just Rs 15mn due to provision write-backs of Rs 150mn.
Maintain BUY: YESB has been one of our preferred picks in the private banking
space. While the bank’s low CASA remains a concern, we expect an improvement
on this front driven by branch rollouts, higher vintage of existing branches and
moderating asset growth. Maintain BUY with a target price of Rs 400/share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
In fine fettle
YESB’s Q1FY12 results were largely in line with our estimates. Advances growth
moderated to 26% YoY (a 4% dip QoQ) due to focus on balance sheet consolidation.
Deposits also declined QoQ as the bank repaid some of its bulk deposits. While
CASA deposits remained flat, they were up 59bps QoQ in percentage terms to
10.9%. NIMs were maintained at 2.8%. PAT was above our estimates, but boosted
by provision write-backs of Rs 150mn. Asset quality remained healthy with
GNPA/NNPA/restructured assets at 0.17%/0.01%/0.26%. We expect YESB to post a
strong operating performance marked by a 33%/26% CAGR in NII/PAT over
FY11–13E and ROEs at 22%.
Focus on balance sheet consolidation: Deposits were lower 5% QoQ due to decline
in deposits from wholesale banking, government-backed institutions and the
institutional segment (Fig 5). CASA/retail deposits grew by 0.4%/17% QoQ. The
bank opened 41 branches during the quarter and now plans to accelerate its ATM
openings and product launches to boost its retail deposit base. To this end, the bank
has even hired a few senior employees from rival banks. While advances fell by 4%
QoQ, the asset mix remained largely stable (Fig 4).
Fee income in-line; C/I ratio stable: Non-interest income grew by 15% YoY on
higher transaction income (Fig 5). Financial advisory income was up 9% YoY.
Operating expenses increased 24% YoY as employee expenses jumped 35% YoY.
The C/I ratio was stable at 37.4%.
Asset quality stays healthy: GNPA/NNPA improved further and specific
provisioning increased to 95%. Total restructured assets stood at only 0.4%.
Provisions were low at just Rs 15mn due to provision write-backs of Rs 150mn.
Maintain BUY: YESB has been one of our preferred picks in the private banking
space. While the bank’s low CASA remains a concern, we expect an improvement
on this front driven by branch rollouts, higher vintage of existing branches and
moderating asset growth. Maintain BUY with a target price of Rs 400/share.
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