YES BANK - SEPTEMBER QUARTER RESULT FY17

Yes Bank reported strong numbers in the second quarter of the financial year FY17. Net Interest Income, difference between interest earned and expended was at Rs. 14462 mn up by 30.50% YOY. Net Profit or PAT also grew in double digits at 31.30% YOY, from Rs. 6105 mn compared to Rs. 8015 mn in the current September quarter. Net Interest Margin (NIM) rose 10 basis points YOY whereas quarterly status quo is maintained at 3.4%. With respect to asset quality NNPAS were constant at 0.29% quarterly whereas YOY, there is rise of 9 basis points. GNPAs as a percentage of gross advances rose by 22 basis points YOY though yearly rise was restricted to just 4 basis points. Provisions curtailed quarterly by 22%, jumped 56% YOY compared to same period previous year. Double digit growth rate is visible in all business segments, but retail segment stole the show galloping at 150% on yearly basis. As a result, major driving force for the bank, corporate segment’s share in total revenue, is reduced to 63% from 66% same period previous year. Other Income or Non Interest Income constituting 18% of total income exhibited 1% de-growth in the current September quarter where as YOY growth was a healthy 44%. The bank has achieved for the first time CASA ratio of 30.30% in the current September quarter. Low cost funding or CASA expanded 480 basis points YOY and 70 basis points over the previous June quarter. Growth momentum continued for both Deposits and Advances with healthy yearly growth of 29% and 38% respectively. Advances and Deposits stood at Rs. 1102162 mn and Rs. 1280238 mn respectively with quarterly growth of 4%.

Net Profit Margin for the Bank is seen at 20.83% X FY 17E and 21.34% x FY18E respectively. At CMP of Rs. 1215.50, EPS is seen at 77.55 x FY17E and 89.00x FY18E respectively. The PE ratio for the bank is seen at 15.67 x FY17E and 13.66 x FY18E respectively. P/B for the Bank is seen at 3.00 x FY17E and 2.46 x FY18E respectively. We recommend BUY for medium and long term investment with the target price of Rs 1300.