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7/30/2019 YesBank Angel 220413
1/14
Please refer to important disclosures at the end of this report 1
Particulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy)NII 638 584 9.2 448 42.4Pre-prov. profit 634 563 12.5 430 47.3
PAT 362 342 5.8 272 33.2Source: Company, Angel Research
For 4QFY2013, Yes Bank reported a strong performance on the earnings as wellas the asset quality front. On the operating front, while higher-than-anticipatedgrowth in other income (42.4% yoy) aided pre-provisioning profit to grow by47.3% yoy, slightly above estimates, the bank used the opportunity to makehigher provisions (PCR up by 13 percentage points), which resulted in earnings
growth of 33.2% yoy, in-line with our estimates.
Business growth robust, NIMs stable qoq: During 4QFY2013, the bank registereda healthy growth in its business, as advances and deposits grew by 23.7% and36.2% yoy, respectively. CASA deposits grew by 71.6% yoy, thereby taking itsCASA ratio to 18.9% from 15.0% as of 4QFY2012. Savings deposits rose by22.8% qoq to `6,023cr. NIMs for the bank remained stable sequentially at 3.0%.The banks non-interest income grew strongly by 42.4% yoy to `379cr, largely onaccount of substantial growth witnessed in the financial advisory and retail feeincome streams. On the asset quality front, the bank witnessed an increase in theGross NPA levels (higher by 23.7% sequentially, on an absolute basis). However,the bank stepped up its PCR from 79.6% to 92.6%, resulting in a 3bp sequentialdecline in the Net NPA ratio to 0.01%.
Outlook and valuation: Yes Banks growth as well as its Managements trackrecord has been impeccable so far. The bank has taken the challenge of buildinga retail deposit franchise head-on and has doubled its branch network over thepast two years to 430 branches now. We expect the bank to continue registeringrobust growth on the retail deposit franchise front, however, with the likely entry ofnew strong players in the sector, the opportunity for market shares gains could getreduced from the levels envisaged earlier.
On the asset quality front, the bank has performed well so far, with credit costscontained at ~35bps for FY2013. However going ahead, the Management hasguided credit costs for FY2014E, to be in the range of 50-60bps and hasindicated adversely labeled assets to the tune of 1-2% of loan book, which islikely to reflect in significant increase in provisioning costs for the bank from thecurrent levels. As a result, even with 25% balance sheet growth, earnings may be
at lower levels of 15%. At CMP, post the recent rise, the stock trades at a valuationof 2.4x FY2014E ABV and 2.0x FY2015E ABV, which in our view, factors in mostof the positives for the bank and offers limited scope for upside from the currentlevels. Hence, we recommend a Neutral rating on the stock.Key financialsY/E March (` cr) FY2012 FY2013 FY2014E FY2015ENII 1,616 2,219 2,893 3,525% chg 29.6 37.3 30.4 21.9
Net profit 977 1,301 1,490 1,716% chg 34.4 33.1 14.6 15.1
NIM (%) 2.6 2.7 2.8 2.8
EPS (`) 27.7 36.3 41.6 47.8P/E (x) 17.3 13.2 11.5 10.0
P/ABV (x) 3.6 3.0 2.4 2.0
RoA (%) 1.5 1.5 1.4 1.3
RoE (%) 23.1 24.8 23.2 22.1
Source: Company, Angel Research
NEUTRALCMP `480
Target Price -
Investment Period -
Stock Info
Sector Banking
Market Cap (` cr) 17,196
Beta 1.2
52 Week High / Low 539/294
Avg. Daily Volume 248,931
Face Value (`) 10
BSE Sensex 18,731Nifty 5,689
Reuters Code YESB.BO
Bloomberg Code YES@IN
Shareholding Pattern (%)
Promoters 25.8
MF / Banks / Indian Fls 15.8
FII / NRIs / OCBs 48.8
Indian Public / Others 9.6
Abs. (%) 3m 1yr 3yr
Sensex (6.2) 7.9 6.5
Yes Bank (8.5) 29.2 91.8
Vaibhav Agrawal022 3935 7800 Ext: 6808
Sourabh Taparia022 3935 7800 Ext: 6872
Akshay Narang022 3935 7800 Ext: 6829
Harshal Patkar022 3935 7800 Ext: 6847
Yes BankPerformance Highlights
4QFY2013 Result Update | Banking
April 17, 2013
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Yes Bank | 4QFY2013 Result Update
April 17, 2013 2
Exhibit 1:4QFY2013 performance summary (standalone)Particulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy) FY2013 FY2012 % chgInterest earned 2,288 2,134 7.2 1,785 28.2 8,294 6,307 31.5- on Advances / Bills 1,465 1,394 5.1 1,196 22.5 5,397 4,427 21.9- on investments 814 726 12.2 578 40.8 2,859 1,847 54.8
- on balance with RBI & others 3 4 (37.2) 6 (57.3) 17 23 (29.0)
- on others 5 10 (47.2) 4 20.3 21 10 104.1
Interest Expended 1,650 1,549 6.5 1,337 23.4 6,075 4,692 29.5Net Interest Income 638 584 9.2 448 42.4 2,219 1,616 37.3Other income 379 313 21.1 266 42.4 1,257 857 46.7- Financial markets 72 39 82.7 69 4.1 252 183 38.1
- Financial advisory 166 162 2.0 102 62.4 550 363 51.4
- Transaction banking 93 81 15.7 70 33.0 323 237 36.2
- Retail and others 49 31 57.6 26 91.4 132 74 78.2
Operating income 1,018 898 13.4 715 42.4 3,476 2,473 40.6Operating expenses 384 334 14.8 284 35.0 1,335 933 43.1- Employee expenses 174 162 7.5 134 30.3 656 475 38.0
- Other Opex 209 172 21.7 151 39.2 679 457 48.5
Pre-provision Profit 634 563 12.5 430 47.3 2,142 1,540 39.1Provisions & Contingencies 98 57 72.1 28 242.5 216 90 139.4
PBT 536 507 5.8 402 33.5 1,926 1,450 32.8Provision for Tax 174 164 5.9 130 33.9 625 473 32.1
PAT 362 342 5.8 272 33.2 1,301 977 33.1Effective Tax Rate (%) 32.5 32.5 2bp 32.4 11bp 32.5 32.6 (0.5)
Source: Company, Angel Research
Exhibit 2:4QFY2013 Actual vs. estimatesParticulars (` cr) Actual Estimates Var. (%)Net interest income 638 615 3.7
Other income 379 352 7.9
Operating income 1,018 967 5.2Operating expenses 384 377 1.6
Pre-prov. profit 634 589 7.6Provisions & cont. 98 58 68.8
PBT 536 532 0.9Prov. for taxes 174 172 1.0
PAT 362 359 0.8Source: Company, Angel Research
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Yes Bank | 4QFY2013 Result Update
April 17, 2013 3
Exhibit 3:4QFY2013 performance analysis (standalone)Particulars 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy)Balance sheetAdvances (`cr) 47,000 43,857 7.2 37,989 23.7Deposits (`cr) 66,956 56,401 18.7 49,152 36.2
Credit-to-Deposit Ratio (%) 70.2 77.8 (756)bp 77.3 (709)bp
Current deposits (`cr) 6,665 5,436 22.6 4,891 36.3
Savings deposits (` cr) 6,023 4,905 22.8 2,501 140.8
CASA deposits (`cr) 12,688 10,341 22.7 7,392 71.6
CASA ratio (%) 18.9 18.3 61bp 15.0 391bp
CAR (%) 18.3 18.0 30bp 17.9 36bp
Tier 1 CAR (%) 9.5 9.0 50bp 9.9 (40)bp
Profitability Ratios (%)Yield on advances 12.4 12.3 10bp 12.5 (10)bp
Cost of funds 8.4 8.5 (10)bp 9.0 (60)bp
Reported NIM 3.0 3.0 0bp 2.8 20bp
Cost-to-income ratio 37.7 37.2 48bp 39.8 (207)bp
Asset qualityGross NPAs (` cr) 94 76 23.7 84 12.5
Gross NPAs (%) 0.2 0.2 3bp 0.2 (2)bp
Net NPAs (`cr) 7 16 (55.1) 17 (60.0)
Net NPAs (%) 0.01 0.04 (3)bp 0.1 (4)bp
Provision Coverage Ratio (%) 92.6 79.6 1301bp 79.2 1341bp
Provisions to avg. assets (%) 0.4 0.3 15bp 0.2 26bp
Source: Company, Angel Research
Growth in customer assets remains strong
During 4QFY2013, the bank registered a healthy growth in its business, as
advances grew by 23.7% yoy, while deposits increased by 36.2% yoy. Growth in
Customer Assets (loans & credit substitutes) remained strong at 30.9% yoy. Within
the customer asset portfolio of the bank, Corporate Banking portfolio constituted
64.7%, Retail (incl. MSME) portfolio accounted for 18.2% and the balance (17.1%)
constituted Commercial Banking.
CASA deposits grew by 71.6% yoy, thereby taking the CASA ratio to 18.9% as of4QFY2013, up from 15% as of 4QFY2012 and 18.3% as of 3QFY2013. Savings
deposits rose by 140.8% yoy and 22.8% qoq to `6,023cr. As a result of strong
performance on the CASA front, retail liabilities as a proportion of total deposits
(CASA + retail term) have increased to 35.5% from 32.7% as of 4QFY2012. The
Management has plans to increase the CASA ratio to 30%, and increase the share
of retail deposits to total deposits to 55-60% in the next two years.
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Yes Bank | 4QFY2013 Result Update
April 17, 2013 4
Exhibit 4:Advances and deposits growth trend
Source: Company, Angel Research
Exhibit 5:Customer Assets breakup as of 4QFY2013
Source: Company, Angel Research
Saving deposits continue to witness strong traction
Immediately post the savings rate de-regulation, the bank had aggressively hiked
its savings account interest rates, which is leading to a paradigm shift in the banks
franchise from a predominantly wholesale franchise to one that will increasingly
have much needed retail play as well.
Highlighting the strong traction, savings account deposits rose by 22.8% qoq to
`6,023cr (have grown by more than six times on an absolute basis since the
savings deposit rate deregulation in October 2011). Even, the share of retail
deposits (CASA and retail term deposits) has now risen to 35.5% of total deposits
from 32.7% a year ago, thereby reducing the banks dependence on higher
costing bulk deposits.
The bank has doubled its branch network in the past two years and has aggressive
network expansion plans (substantial tier-I licenses available with the bank), which
will further its aspirations of creating a sustainable retail deposits franchise, as
deposits density is relatively better in tier-I locations, and also keep the bank well
on track to meet its version2.0 branch, CASA, and other growth targets.
The bank has also incorporated a retail broking subsidiary to complement its current
retail offerings and enable cross selling of 3-in-1 savings accounts to its expanding
retail customer base.
Exhibit 6:CASA deposit growth yoy
Source: Company, Angel Research
Exhibit 7:CASA ratio improves 61bp sequentially
Source: Company, Angel Research
10.5
7.0
16.4
15.2
22.9
18.6
22.3
20.2
23.7
36.2
-
10.0
20.0
30.0
40.0
50.0
Advances yoy growth (%) Deposits yoy growth (%)
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
65
17
18
Corp. and Insti. Banking Commercial Banking Branch Banking
55.6
71.5
86.7
74.971.6
-
20.0
40.0
60.0
80.0
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
(%)
15.016.3
17.318.3
18.9
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
(%)
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Yes Bank | 4QFY2013 Result Update
April 17, 2013 5
NIMs stable qoq
The banks cost of funds dipped by 10bp sequentially to 8.4% during the quarter,
primarily on account of traction in savings account deposits. Yield on advances for
the bank witnessed a sequential increase of 10bp to 12.4%. However, the NIMs for
the bank remained stable sequentially at 3.0%, primarily due to a 9bp qoq decline
in the yield on investments, due to a change in the investment portfolio mix.
Exhibit 8:Cost of funds declined largely on SA traction
Source: Company, Angel Research
Exhibit 9:NIM
Source: Company, Angel Research
Strong growth in non-interest income during 4QFY2013
During 4QFY2013, the banks non-interest income grew strongly by 42.4% yoy to
`379cr, on account of substantial growth witnessed in financial advisory and retail
fee income streams. Fee income from the financial advisory segment, which is
largely linked to deal closures during the quarter, grew by 62.4% yoy, while the
income from the retail fee segment nearly doubled on a yoy basis.
Exhibit 10:Strong growth in fee from financial advisory & retail segmentsParticulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy)Financial markets 72 39 82.7 69 4.1
Financial advisory 166 162 2.0 102 62.4
Transaction banking 93 81 15.7 70 33.0
Retail and others 49 31 57.6 26 91.4
Other income 379 313 21.1 266 42.4Source: Company, Angel Research
Strong asset quality maintained
During the quarter, the bank maintained a strong asset-quality profile. Though the
gross NPAs increased by 3bp to 0.2% (on an absolute basis, by 23.4% qoq), aided
by a strong growth in fee income during the quarter, the bank increased its PCR
from 79.6% to 92.6%, leading to a 3bp sequential decline in the Net NPA ratio to
0.01%. Restructured advances remained under control at 0.31% of gross
advances.
9.0 9.08.7
8.5 8.4
5.0
6.0
7.0
8.0
9.0
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
(%)
2.8 2.8
2.9
3.0 3.0
2.4
2.5
2.6
2.7
2.8
2.9
3.0
3.1
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
(%)
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Yes Bank | 4QFY2013 Result Update
April 17, 2013 6
Exhibit 11:Asset quality amongst the best in industry
Source: Company, Angel Research
Expanding branch network; Cost ratios under control
The bank added another 18 branches in 4QFY2013, taking the total number of
branches to 430. It also added 228 ATMs in 4QFY2013, taking the total number
of ATMs to 950. Going ahead, the bank has aggressive plans for network
expansion, and is planning to add 150-175 branches in FY2014. As of
4QFY2013, the cost-to-income ratio for the bank remained under check at 37.7%.
Further, even after considering significant branch expansions plans, the
management expects to contain the cost-to-income ratio below 40%.
Exhibit 12:Branch network expands steadily
Source: Company, Angel Research
Exhibit 13:Cost ratios remain under control
Source: Company, Angel Research
Overall capital adequacy continues to remain healthy
The banks capital adequacy ratio (CAR) continued to be strong at 18.3%, with
tier-I ratio at 9.5%. With RoE of above 22%, the banks retained earnings itself are
capable for funding a balance sheet growth of 18-20%. The Management has also
approved a plan to raise US$500mn of equity capital in next 12 month, the
timing, however would remain subject to market conditions.
84 110 103 76 9417 24 20 16 7
79 7880 80
93
50
60
70
80
90
100
-
20
40
60
80
100
120
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
(`cr) Gross NPA Net NPA NPA coverage % (RHS)
356381
400 412430
50
100
150
200
250
300
350
400
450
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
1.6 1.6 1.6 1.6 1.6
39.8 39.5 39.5
37.237.7
1.0
1.2
1.4
1.6
1.8
30.0
32.5
35.0
37.5
40.0
42.5
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
Opex to avg assets (%, RHS) Cost-to-income ratio (%)
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Yes Bank | 4QFY2013 Result Update
April 17, 2013 7
Exhibit 14:Overall capital adequacy remains healthy
Source: Company, Angel Research
9.9 9.2 9.5 9.0 9.5
8.07.3
8.0 9.0 8.8
17.916.5
17.5 18.018.3
-
5.0
10.0
15.0
20.0
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
Tier-I CAR (%) Tier-II CAR (%)
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Yes Bank | 4QFY2013 Result Update
April 17, 2013 8
Investment arguments
Savings rates deregulation aiding retail customer acquisition
Yes Bank had aggressively hiked savings interest rates immediately post thederegulation, which is leading to a paradigm shift in the banks franchise, ie from
a predominantly wholesale franchise to one that will increasingly have a much
needed retail play as well.
Savings rate deregulation does not allow banks to offer differential rates to
different groups of customers, Hence, it would be unfavorable for larger players to
offer higher rates to their entire customer base just to protect some amount of
market share loss to competition from smaller players such as Yes Bank (more
than 33,000 branches and `8lakh cr savings deposits for large banks compared
to ~430 branches and `6,000cr savings deposits for Yes Bank). While the loss in
market share for larger players would be minor, the gain for smaller banks, suchas Yes Bank offering higher savings rates, is expected to be significant, especially
considering the low bases of their retail franchises.
Yes Bank continue to experience strong traction in its savings deposits, with SA
deposits increasing 22.8% qoq (and by more than six times on an absolute basis)
during 4QFY2013, since the savings deposit rate deregulation in October 2011.
Even going forward, we expect the savings deposit accretion for the bank to
remain robust, however, the opportunity available for banks like Yes Bank to gain
market share in savings deposits, could get reduced from the levels envisaged
earlier, with the likely entry of new players in the sector.
A-list Management and ability to raise capital
Yes Bank has an A-list top Management team, which brings to the table rich
experience from the best banks in India, including Bank of America, ABN AMRO,
Citibank, ICICI Bank, Rabo India and HDFC Bank. The banks performance also
benefits from the Managements ability to raise equity capital (at increasing,
book-accretive premiums).
Capital raising to be book accretive
Yes Bank plans to grow its customer asset base at 25%+ for the next 2-3 years,
leading to higher capital requirements. The banks capital adequacy ratio (CAR)
continues to be strong at 18.3%, with tier-I ratio at 9.5%. With RoE of above 22%,
the banks retained earnings itself are capable of funding balance sheet growth of
18-20%. The Management has also approved a plan to raise US$500mn equity
capital in next 12 month, the timing, however would remain subject to market
conditions. Any capital raising for the bank is likely to be book-accretive and will
aid in further enhancing the bank's credit market share going forward.
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Yes Bank | 4QFY2013 Result Update
April 17, 2013 9
Investment Concerns
Asset quality remains strong, but concerns ahead
The bank has maintained strong asset quality in spite of growing at a fast clip overthe past few years (gross and net NPA ratios at a marginal 0.2% and 0.01%,
respectively and credit costs contained at ~35bps for FY2013), which has been
aided by the smaller size of its balance sheet so far. The banks PCR (without
including technical write-offs) remains strong at 92.6% as of 4QFY2013. The bank
has also been astute in managing its growth rate and asset-liability durations, in-
line with the changing external environment.Going ahead, the Management has
guided at credit costs, for FY2014E, to be in the range of 50-60bps and has
indicated adversely labeled assets to the tune of 1-2% of loan book, which is
likely to reflect in significant increase in provisioning costs for the bank from
the current levels.
Medium-term downside risks to RoA
The banks credit market share has steadily increased on the back of a robust
credit CAGR of 31.8% over the past five years. The bank has so far managed to
source loans with relatively above-average profitability, keeping its NIM above
2.7% since FY2009, in spite of a CASA ratio of just below 19%. Going forward
though, as the size of the balance sheet increases, we believe RoA compression
remains a risk to the bank. Having said that, the recent deregulation of savings
account rates and the consequent strong accretion of SA deposits for Yes Bank are
likely to aid in countering this impact to an extent.
Outlook and valuationYes Banks growth as well as its Managements track record has been impeccable
so far. On the liabilities side, the bank has a challenge to build a retail deposit
franchise, which involves significant execution risks. However, it has taken the
challenge head-on and has doubled its branch network over the past two years to
430 branches now. Significant network expansion coupled with aggressive interest
rate offering on the savings deposits has resulted in a sevenfold increase in savings
deposits base since the deregulation in October 2011. We expect the bank to
continue registering robust growth on the retail deposit franchise front, however,
with the likely entry of new strong players in the sector, the opportunity for market
share gains could get reduced from the levels envisaged earlier.
On the asset quality front, the bank has performed well so far, with credit costs
contained at ~35bp for FY2013. Going ahead, the Management has guided at
FY2014E credit costs to be in the range of 50-60bp and has indicated adversely
labeled assets to the tune of 1-2% of the loan book, which is likely to result in a
significant increase in provisioning costs for the bank from the current levels. We
had always factored in higher levels of provisioning for the bank, however,
reflecting the directional guidance by the Management, we have revised our
FY2014 and FY2015 estimate for provisioning expenses by 35.2% and 28.4%,
respectively. As a result, even with 25% balance sheet growth, earnings may be at
lower levels of 15%.
At the CMP, post the recent rise, the stock trades at a valuation of 2.4x FY2014EABV and 2.0x FY2015E ABV, which in our view, factors in most of the positives for
the bank and offers limited scope for upside from the current levels. Hence, werecommend a Neutral rating on the stock.
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Yes Bank | 4QFY2013 Result Update
April 17, 2013 10
Exhibit 15:Key assumptionsParticulars (%) Earlier estimates Revised estimatesFY2014 FY2015 FY2014 FY2015Credit growth 25.0 28.0 26.0 28.0Deposit growth 25.0 28.0 25.0 26.0
CASA ratio 25.8 30.0 22.1 26.0
NIMs 3.0 3.0 2.8 2.8
Other income growth 19.9 27.6 19.1 26.0
Growth in staff expenses 30.0 30.0 30.0 30.0
Growth in other expenses 30.0 30.0 32.5 30.0
Slippages 0.8 0.9 0.9 1.0
Source: Angel Research
Exhibit 16:Change in estimatesParticulars (` cr) FY2014 FY2015Earlierestimates Revisedestimates Var. (%) Earlierestimates Revisedestimates Var. (%)NII 2,786 2,893 3.8 3,464 3,525 1.8
Non-interest income 1,474 1,498 1.6 1,880 1,887 0.3
Operating income 4,260 4,390 3.1 5,344 5,411 1.3Operating expenses 1,727 1,752 1.4 2,245 2,277 1.4
Pre-prov. profit 2,533 2,639 4.2 3,099 3,134 1.1Provisions & cont. 282 381 35.2 417 534 28.2
PBT 2,251 2,257 0.3 2,682 2,599 (3.1)
Prov. for taxes 765 767 0.3 912 884 (3.1)
PAT 1,486 1,490 0.3 1,771 1,716 (3.1)Source: Angel Research
Exhibit 17:P/ABV band
Source: Company, Angel Research
0
100
200
300
400
500
600
700
800
Jul-05
Nov-0
5
Mar-06
Jul-06
Nov-0
6
Mar-07
Jul-07
Nov-0
7
Mar-08
Jul-08
Nov-0
8
Mar-09
Jul-09
Nov-0
9
Mar-10
Jul-10
Nov-1
0
Mar-11
Jul-11
Nov-1
1
Mar-12
Jul-12
Nov-1
2
Mar-13
Jul-13
Nov-1
3
Mar-14
Price (`) 1x 1.5x 2x 2.5x 3x
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Yes Bank | 4QFY2013 Result Update
April 17, 2013 11
Exhibit 18:Recommendation summaryCompany Reco. CMP(`) Tgt. price(`) Upside(%) FY2015EP/ABV (x) FY2015ETgt. P/ABV (x) FY2015EP/E (x) FY2013-15EEPS CAGR (%) FY2015ERoA (%) FY2015ERoE (%)AxisBk Buy 1,377 1,698 23.3 1.5 1.9 9.1 16.9 1.6 17.5
FedBk Neutral 436 - - 1.0 - 7.3 10.0 1.2 13.7HDFCBk Neutral 661 - - 3.1 - 15.5 21.7 1.8 22.0ICICIBk* Buy 1,097 1,306 19.0 1.6 1.9 11.3 15.5 1.4 16.5
SIB Accumulate 24 25 5.4 0.9 0.9 5.2 11.4 1.0 17.1
YesBk Neutral 480 - - 2.0 - 10.0 14.9 1.3 22.1AllBk Accumulate 136 155 14.2 0.5 0.6 3.8 12.6 0.8 14.2
AndhBk Neutral 91 - - 0.6 - 3.9 4.2 0.8 13.4BOB Buy 676 815 20.5 0.7 0.9 4.7 17.0 1.0 16.0
BOI Accumulate 316 360 13.7 0.7 0.8 4.6 21.8 0.8 15.1
BOM Accumulate 49 56 14.9 0.5 0.6 3.7 14.8 0.6 15.6
CanBk Accumulate 414 461 11.2 0.7 0.8 4.8 14.0 0.8 14.1CentBk Neutral 68 - - 0.6 - 3.8 42.8 0.6 13.3CorpBk Buy 379 453 19.5 0.5 0.6 3.6 8.3 0.8 14.4
DenaBk Accumulate 93 101 8.7 0.5 0.6 3.5 4.3 0.8 15.3
IDBI# Accumulate 84 96 13.6 0.5 0.5 3.6 24.5 0.9 13.5
IndBk Buy 163 200 22.7 0.6 0.7 3.9 6.5 1.0 14.9
IOB Buy 64 78 20.9 0.4 0.5 3.2 53.3 0.7 13.1
J&KBk Accumulate 1,250 1,323 5.9 0.9 1.0 6.2 (5.2) 1.2 16.0
OBC Accumulate 255 270 5.9 0.5 0.6 4.0 17.5 0.8 13.1
PNB Buy 748 889 19.0 0.7 0.8 4.2 12.4 1.0 16.3
SBI* Accumulate 2,244 2,567 14.4 1.3 1.4 8.0 16.4 1.0 17.0
SynBk Accumulate 113 130 14.7 0.6 0.7 3.9 (3.5) 0.7 15.2
UcoBk Neutral 63 - - 0.6 - 4.3 36.9 0.6 12.6UnionBk Accumulate 231 264 14.3 0.7 0.8 4.8 21.2 0.8 15.3
UtdBk Buy 59 68 15.0 0.4 0.5 2.8 40.4 0.7 14.7
VijBk Neutral 50 - - 0.5 - 4.6 21.2 0.5 11.7Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF
Company Background
Yes Bank is the youngest private sector bank in the country, promoted by
professional bankers. The bank started its operations in CY2004 and has beengrowing at a scorching pace, focusing on niche assets to maintain profitable
margins and asset quality. The bank's thrust so far has been primarily on
wholesale banking operations for mid-size corporates. Now aiming for a higher
share of retail deposits, the bank has recently doubled its network to 430 branches
(targeting the urban affluent segment) and is planning to expand its network to
750-900 branches by FY2015.
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Income statement
Y/E March (` cr) FY09 FY10 FY11 FY12 FY13E FY14E FY15ENet Interest Income 511 788 1,247 1,616 2,219 2,893 3,525- YoY Growth (%) 54.6 54.1 58.2 29.6 37.3 30.4 21.9Other Income 435 576 623 857 1,257 1,498 1,887- YoY Growth (%) 20.6 32.3 8.3 37.5 46.7 19.1 26.0
Operating Income 946 1,363 1,870 2,473 3,476 4,390 5,411- YoY Growth (%) 36.9 44.1 37.2 32.2 40.6 26.3 23.3
Operating Expenses 419 500 680 933 1,335 1,752 2,277- YoY Growth (%) 22.7 19.5 35.9 37.2 43.1 31.3 30.0
Pre - Provision Profit 528 863 1,190 1,540 2,142 2,639 3,134- YoY Growth (%) 50.7 63.6 37.9 29.4 39.0 23.2 18.8
Prov. & Cont. 62 137 98 90 216 381 534- YoY Growth (%) 41.6 121.6 (28.2) (8.1) 139.4 76.5 40.2
Profit Before Tax 466 726 1,092 1,450 1,926 2,257 2,599- YoY Growth (%) 52.0 55.9 50.3 32.8 32.8 17.2 15.1
Prov. for Taxation 162 249 365 473 625 767 884- as a % of PBT 34.8 34.2 33.4 32.6 32.5 34.0 34.0
PAT 304 478 727 977 1,301 1,490 1,716- YoY Growth (%) 51.9 57.2 52.2 34.4 33.1 14.6 15.1
Balance sheetY/E March (` cr) FY09 FY10 FY11 FY12 FY13E FY14E FY15EShare Capital 297 340 347 353 359 359 359Reserves & Surplus 1,327 2,750 3,447 4,324 5,449 6,689 8,113
Deposits 16,169 26,799 45,939 49,152 66,956 83,694 105,455
- Growth (%) 21.8 65.7 71.4 7.0 36.2 25.0 26.0
Borrowings 2,189 2,564 3,333 9,343 15,507 16,915 20,954
Tier 2 Capital 1,513 2,185 3,358 4,813 5,415 5,280 5,148
Other Liab. & Prov. 1,405 1,745 2,583 5,677 5,419 6,627 8,083
Total Liabilities 22,901 36,383 59,007 73,662 99,104 119,564 148,111Cash Balances 1,278 1,995 3,076 2,333 3,339 3,766 4,745
Bank Balances 645 678 420 1,253 727 1,793 2,222
Investments 7,117 10,210 18,829 27,757 42,976 48,685 57,797
Advances 12,403 22,193 34,364 37,989 47,000 59,219 75,801
- Growth (%) 31.5 78.9 54.8 10.5 23.7 26.0 28.0
Fixed Assets 131 115 132 177 230 269 323
Other Assets 1,327 1,191 2,186 4,153 4,833 5,831 7,223
Total Assets 22,901 36,383 59,007 73,662 99,104 119,564 148,111- Growth (%) 34.8 58.9 62.2 24.8 34.5 20.6 23.9
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Ratio analysis
Y/E March FY09 FY10 FY11 FY12 FY13E FY14E FY15EProfitability ratios (%)NIMs 2.7 2.8 2.7 2.6 2.7 2.8 2.8Cost to Income Ratio 44.2 36.7 36.3 37.7 38.4 39.9 42.1
RoA 1.5 1.6 1.5 1.5 1.5 1.4 1.3
RoE 20.6 20.3 21.1 23.1 24.8 23.2 22.1
B/S ratios (%)CASA Ratio 8.7 10.5 10.3 15.0 18.9 22.1 26.0
Credit/Deposit Ratio 76.7 82.8 74.8 77.3 70.2 70.8 71.9
CAR 16.6 20.6 16.5 17.9 15.9 14.5 13.0
- Tier I 9.5 12.9 9.7 9.9 8.7 8.7 8.3
Asset Quality (%)Gross NPAs 0.7 0.3 0.2 0.2 0.2 0.5 1.0
Net NPAs 0.4 0.1 0.0 0.0 0.0 0.1 0.2
Slippages 0.9 0.9 0.2 0.2 0.5 0.9 1.0
Loan Loss Prov. /Avg. Assets 0.3 0.3 0.1 0.0 0.2 0.3 0.3
Provision Coverage 48.5 78.4 88.6 79.2 92.6 83.9 80.0
Per Share Data (`)EPS 10.2 14.1 20.9 27.7 36.3 41.6 47.8
ABVPS (75% cover.) 53.9 91.0 109.3 132.5 161.9 196.5 236.2
DPS - 1.5 2.5 4.0 6.0 6.0 7.0
Valuation RatiosPER (x) 46.9 34.1 22.9 17.3 13.2 11.5 10.0
P/ABVPS (x) 8.9 5.3 4.4 3.6 3.0 2.4 2.0
Dividend Yield - 0.3 0.5 0.8 1.3 1.3 1.5
DuPont AnalysisNII 2.6 2.7 2.6 2.4 2.6 2.6 2.6
(-) Prov. Exp. 0.3 0.5 0.2 0.1 0.2 0.3 0.4
Adj. NII 2.3 2.2 2.4 2.3 2.3 2.3 2.2
Treasury 0.7 0.3 (0.1) 0.1 0.2 0.1 0.1
Int. Sens. Inc. 3.0 2.5 2.3 2.4 2.5 2.4 2.3
Other Inc. 1.4 1.6 1.4 1.2 1.3 1.3 1.3
Op. Inc. 4.4 4.1 3.7 3.6 3.8 3.7 3.6
Opex 2.1 1.7 1.4 1.4 1.5 1.6 1.7PBT 2.3 2.5 2.3 2.2 2.2 2.1 1.9
Taxes 0.8 0.8 0.8 0.7 0.7 0.7 0.7
RoA 1.5 1.6 1.5 1.5 1.5 1.4 1.3Leverage 13.6 12.6 13.9 15.7 16.5 17.0 17.2
RoE 20.6 20.3 21.1 23.1 24.8 23.2 22.1
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Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Yes Bank
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No
Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to -15%) Sell (< -15%)
Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors