This article covers the Highlights from Yes Bank’s Robust Growth Numbers. Private sector lender Yes Bank announced its Q2 FY 18 results and while the NPA number has increased, it is important to analyse the other numbers in conjunction with this.
On a closer look, we can see that the operating performance has been quite strong and the Bank continues to show consistent growth in its key metrics.
On the loan growth, the Bank showed strong robust growth in advances which grew 35% y-o-y even while the overall industry saw muted growth in lending. This proves that the Bank has been able to latch onto opportunities in the sector and manage growth at a healthy rate.
Another key aspect to look at is the kind of shareholder returns generated by Yes Bank. Yes Bank’s shareholder returns continued to show a sustained performance with Return on Equity (RoE) which has been over 17.5% and Return on Assets (RoA) which has been over 1.5% since 2010.
A few years back, the Bank announced a strategy to increase its market share in Retail banking. This seems to be paying off and in the latest quarter Yes Bank has grown its Retail Banking franchise by 78% y-o-y. This strategy is also reflected in the fact that the Bank has strong Current and Savings Account (CASA) growth as well as improved Net-Interest-Margin (NIM) of 3.7%
On the Divergence front, the management has been able to resolve a larger portion with only INR 1,219 crores remaining as NPA as on September 30, 2017 from the INR 6,355 crore divergence observed by RBI. Despite the observed divergence of INR 6,355 crores as per the RBI RBS exercise, the Bank was able to resolve a large portion of this, and only INR 1,219 crores remained as NPA as on September 30, 2017
Lastly, on the profit front, it was a landmark quarter for Yes Bank as it crossed the milestone of INR 1,000 crore quarterly profit in just over 13 years of operations.
Given the above, it is clear that the core operating performance of YES Bank continues to remain strong and it is posting healthy growth quarter-on-quarter. When compared with some of its other private sector peers like Axis Bank and ICICI Bank, we expect that even in the future YES Bank’s growth will be better. The growth metrics in terms of loan growth as well as profitability have been better than Axis Bank and ICICI Bank. It has been smartly using sectoral opportunities to grow its advances and the recent fund-raising suggests that it has the required fuel to grow at a robust pace in the coming years.
