1QFY2019 Result Update | Banking
July 27, 2018
Yes Bank
BUY
CMP
`370
Performance Highlights
Target Price
`435
Particulars (` cr)
1QFY19
4QFY18
% chg (qoq)
1QFY18
% chg (yoy)
Investment Period
12 Months
NII
2,219
2,154
3.01
1,809
22.68
Sector
Banking
Pre-prov. profit
2,455
2,135
14.95
1,704
44.04
Market Cap (` cr)
32,434
PAT
1,260
1,179
6.86
966
30.54
Beta
1.6
Source: Company, Angel Research
52 Week High / Low
910/ 590
Yes bank delivered healthy set of numbers for Q1FY2019, with PAT growth of
Avg. Daily Volume
33,43,514
30.5% yoy. On the operating front, the bank reported 22.7% yoy growth in NII,
Face Value (`)
10
however, the NIM sequentially softened by 10bps driven by higher funding cost
BSE Sensex
24,825
and stable loan book yields. The bank managed to reduce its expenses and
Nifty
7,556
brought down the cost/income ratio from 42.1% in Q1FY2018 to 37.3% in
Reuters Code
YESB.BO
Q1FY2019.
Bloomberg Code
[email protected]
Robust advance growth; NIM pressurized
During 1QFY19, the bank’s advances grew by 53% yoy, of which retail loan book
Shareholding Pattern (%)
increased 105% yoy to constitute 14% of the total advances. The corporate loans
inched up by 41% yoy. The net interest income during this period grew by 22.7%
Promoters
22.0
which not commensurate to advance growth. NIM compressed by
10bps
MF / Banks / Indian Fls
23.6
sequentially owing to recent corporate lending has been in the 6-12 months MCLR
FII / NRIs / OCBs
42.0
re-pricing bucket, faster hike in deposits rates and growth in international
Indian Public / Others
12.5
business. Moreover, a slower rise in Opex aided lower cost/income by 480bps yoy
to 37.3% in Q1FY19.
Total deposits surged by 42% yoy and 6% qoq in 1QFY19. CASA deposits
accounted for 35.1% of the total deposits.
Abs. (%)
3m 1yr 3yr
On asset quality front, the bank continued to maintain strong asset quality with a
Sensex
(6.9)
(14.9)
25.5
GNPA/NPA ratio of 1.31%/0.59% of loans. Total slippages for the quarter were at
Yes Bank
1.7
(10.5)
45.3
`560cr, Management expect `320cr to be recovered/upgraded by Q2FY19.
Outlook & Valuation: We expect YES Bank to grow its advances at CAGR of 32%
over FY2018-20E. Improvement in CASA, rating up-gradation and in-house
priority sector lending would support NIM going forward. At CMP, YES trades at
2.4x FY20E P/ABV, which we believe is attractive considering growth prospects,
hence, we recommend BUY with a target price of `435 over the next 12 months.
3-year price chart
500
Key financials (Standalone)
400
Y/E March (` cr)
FY16
FY17
FY18
FY19E
FY20E
300
NII
4,567
5,797
7,737
10,593
13,967
200
100
% chg
31
27
33
37
32
0
Net profit
2,539
3,330
4,225
5,951
7,851
% chg
27
31
27
41
32
NIM (%)
3.3
3.4
3.3
3.2
3.2
Source: Company, Angel Research
EPS ( Rs)
11
14
18
26
34
P/E (x)
34
26
20
14
11
Jaikishan Parmar
P/ABV (x)
6.2
4.0
3.4
2.8
2.3
Research Analyst
RoA (%)
1.7
1.8
1.6
1.6
1.6
022 - 39357600 Ext: 6810
RoE (%)
20
19
18
21
23
[email protected]
Source: Company, Angel Research, Note: CMP as of 27/7/18
Please refer to important disclosures at the end of this report
1
Yes Bank | Q1FY2019 Result Update
Exhibit 1: : quarterly results summary
Particulars (` cr)
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
% QoQ
% YoY
Interest Earned
4,060
4,213
4,349
4,654
4,800
5,070
5,743
6,578
14.5
41.3
on Advances / Bills
3,032
3,139
3,259
3,534
3,693
3,846
4,404
5,005
13.6
41.6
on investments
931
964
942
903
923
1,098
1,179
1,351
14.5
49.6
on balance with RBI
49
71
111
179
145
82
110
162
47.8
(9.7)
on others
49
39
37
37
40
44
50
60
22.1
62.4
Interest Expended
2,648
2,724
2,709
2,845
2,915
3,182
3,589
4,359
21.5
53.2
Net Interest Income
1,412
1,489
1,640
1,809
1,885
1,889
2,154
2,219
3.0
22.7
Other Income
922
1,017
1,257
1,132
1,248
1,422
1,421
1,694
19.2
49.6
Operating income
2,334
2,506
2,897
2,941
3,134
3,311
3,575
3,913
9.5
33.1
Operating Expenses
948
1,052
1,206
1,237
1,227
1,309
1,440
1,459
1.3
17.9
Employee expenses
433
467
497
546
563
533
547
591
8.0
8.2
Other Opex
515
585
709
691
664
776
893
868
(2.8)
25.6
Pre Provision Profit
1,386
1,454
1,691
1,704
1,907
2,002
2,135
2,455
15.0
44.0
Provisions & Contingencies
162
115
310
286
447
421
400
626
56.6
118.9
PBT
1,224
1,338
1,381
1,418
1,460
1,580
1,736
1,829
5.4
29.0
Provision for Taxes
423
456
467
453
457
504
556
569
2.2
25.6
Tax rate
35
34
34
32
31
32
32
31
PAT
802
883
914
966
1,003
1,077
1,179
1,260
6.9
30.5
Business Details (`)
Advance
1,10,216
1,17,087
1,32,263
1,39,972
1,48,675
1,71,515
2,03,534
2,14,720
5.5
53.4
YoY
32
35
46
54
53
Borrowing
34,589
36,921
38,607
38,302
44,830
56,302
74,894
78,790
5.2
105.7
Deposit
1,22,581
1,32,376
1,42,874
1,50,241
1,57,990
1,71,731
2,00,738
2,13,395
6.3
42.0
CA
19,192
18,773
19,966
22,604
28,826
28,333
(1.7)
50.9
SA
32,678
36,442
38,758
42,685
44,351
46,598
5.1
27.9
CASA
38,784
44,126
51,870
55,215
58,725
65,289
73,176
74,930
2.4
35.7
CASA %
32
33
36
37
37
38
36
35.1
(134)bp
(164)bp
Asset Quality
GNPA
917
1,006
2,019
1,364
2,720
2,974
2,627
2,824
7.5
107.0
NNPA
323
342
1,072
545
1,543
1,595
1,313
1,263
(3.8)
131.5
Gross NPAs (%)
1
0.85
1.52
0.97
1.82
1.72
1.28
1.31
3bp
34bp
Net NPAs (%)
0
0.29
0.81
0.39
1.04
0.93
0.64
0.59
(5)bp
20bp
PCR (Calculated, %)
65
66
47
60
43
46
50
55
527bp (473)bp
Credit Cost (Annualised) Adv
1
0.39
0.94
0.82
1.20
0.98
0.79
1.17
38bp
35bp
Profitability ratios (%)
C/I
41
42
42
42.1
39
40
40
37.3
(300)bp
(478)bp
RoE
21
22
19
17
18
18
19
19
61bp
198bp
Yield on Advance
11
10.7
9.9
10.1
9.9
9.0
8.7
9.3
67bp
(78)bp
Cost of Fund
7
6.7
6.2
6.2
6.0
5.9
5.7
6.1
44bp
(1)bp
Spread
4
4.0
3.7
3.9
4.0
3.1
3.0
3.2
23bp
(77)bp
NIM Reported
3
3.5
3.6
3.7
3.7
3.5
3.4
3.3
(10)bp
(40)bp
July 27, 2018
2
Yes Bank | Q1FY2019 Result Update
Exhibit 2: Asset Quality
Particulars (` cr)
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Gross NPA
917
1,006
2,019
1,364
2,720
2,974
2,627
2,824
Net NPA
323
342
1,072
545
1,543
1,595
1,313
1,263
Gross NPA %
1
0.85
1.52
0.97
1.82
1.72
1.28
1.31
Net NPA %
0
0.29
0.81
0.39
1.04
0.93
0.64
0.59
Provision Coverage%
65
65.95
46.88
60.03
43.27
46.37
50.02
55.30
Restructured Advances %
0
0.42
0.36
0.24
0.08
0.05
0.04
0.00
Security Receipt (Net) %
0
0.22
0.73
0.69
0.94
1.06
0.92
0.82
Standard SDR %
0
0.17
0.24
0.20
0.32
0.21
-
-
5:25 Refinancing %
0
0.09
0.09
0.10
0.15
0.06
0.05
0.05
S4A %
-
0.01
0.01
0.01
0.01
0.09
0.07
0.07
Total Stressed asset
1.20
2.24
1.63
2.54
2.40
1.72
1.53
Source: Company, Angel Research
Asset quality stable; PCR improves:
Absolute GNPA increased 7.5% to `2,824cr, while NPA declined by 3.8% to
`1,263cr with provision coverage up by 530bps to 55.3%. Management has plans
to raise PCR to 60% in next 2 quarters. Total net stressed loans (NNPA, OSRL, SDR,
S4A, SR, 5:25) stood at 1.53%, down from 1.72% in Q4FY2018.
On the NCLT front, the bank recovered `184cr from one account classified under
NCLT-1. The bank's total exposure to the NCLT list 1 & 2 is `673cr. Bank's
exposure in NCLT list 1 is worth of `23cr, which is classified as NPA with 50% PCR.
Whereas exposure to the NCLT 2 is `650cr, of which `570cr is funded exposure
and has PCR of 43%.
Conference call highlights
Benefit of re-pricing of loan to accrue in subsequent quarters and recent
corporate (Q1& Q2 FY2018) lending has been in the 6-12 months MCLR re-
pricing bucket.
Forex, debt capital market and securities fee income: `70cr on account of SR
redemption, `100cr gain owing to portfolio shuffle and balance was largely
from forex and derivatives.
Corporate fees largely pertain to loan related fees.
W/o for the quarter were `131cr.
Corporate loan: 30-40% growth from working capital loans and 60-70%
growth from term loans.
Majority of the loan book is on MCLR.
Traction in MSME loan to pick up in H2FY2019.
Average SA of `1.6-1.7lakh.
C/I ratio expected to be 39-40%.
July 27, 2018
3
Yes Bank | Q1FY2019 Result Update
Income Statement
Y/E March (` cr)
FY15
FY16
FY17
FY18
FY19E FY20E
Net Interest Income
3,488
4,567
5,797
7,737
10,593
13,967
- YoY Growth (%)
28
31
27
33
37
32
Other Income
2,046
2,712
4,157
5,224
7,414
9,796
- YoY Growth (%)
19
33
53
26
42
32
Operating Income
5,534
7,279
9,954
12,961
18,007
23,763
- YoY Growth (%)
25
32
37
30
39
32
Operating Expenses
2,285
2,976
4,117
5,213
7,202
9,545
- YoY Growth (%)
31
30
38
27
38
33
Pre - Provision Profit
3,250
4,302
5,838
7,748
10,805
14,218
- YoY Growth (%)
21
32
36
33
39
32
Prov. & Cont.
339
536
793
1,554
1,923
2,500
- YoY Growth (%)
(6)
58
48
96
24
30
Profit Before Tax
2,910
3,766
5,044
6,194
8,882
11,718
- YoY Growth (%)
25
29
34
23
43
32
Prov. for Taxation
905
1,227
1,714
1,970
2,931
3,867
- as a % of PBT
31
33
34
32
33
33
PAT
2,005
2,539
3,330
4,225
5,951
7,851
- YoY Growth (%)
24
27
31
27
41
32
Balance Sheet
Y/E March (` cr)
FY15
FY16
FY17
FY18
FY19E FY20E
Equity
418
421
456
461
461
461
Reserve & Surplus
11,262
13,366
21,598
25,298
30,177
36,615
Net worth
11,680
13,787
22,054
25,758
30,638
37,076
Deposits
91,176
1,11,720
1,42,874
2,00,738
2,66,370
3,53,319
- Growth (%)
23
23
28
41
33
33
Borrowings
26,220
31,659
38,607
74,894
1,00,357
1,29,461
Other Liab. & Prov.
7,094
8,098
11,525
11,056
18,797
21,198
Total Liabilities
1,36,170
1,65,263
2,15,060
3,12,446
4,16,163
5,41,053
Cash Balances
5,241
5,776
6,952
11,426
15,181
20,140
Bank Balances
2,317
2,442
12,597
13,309
17,517
23,238
Investments
43,228
48,838
50,032
68,399
91,086
1,20,839
Advances
75,550
98,210
1,32,263
2,03,534
2,74,771
3,57,202
- Growth (%)
36
30
35
54
35
30
Fixed Assets
319
471
684
832
1,168
1,549
Other Assets
9,516
9,526
12,532
14,946
16,441
18,085
Total Assets
1,36,170
1,65,263
2,15,060
3,12,446
4,16,163
5,41,053
- Growth (%)
25
21
30
45
33
30
July 27, 2018
4
Yes Bank | Q1FY2019 Result Update
Key Ratio
Y/E March (` cr)
FY15
FY16
FY17
FY18
FY19
FY20
Profitability ratios (%)
NIMs
3.1
3.3
3.4
3.3
3.2
3.2
Cost to Income Ratio
41.3
40.9
41.4
40.2
40.0
40.2
RoA
1.6
1.7
1.8
1.6
1.6
1.6
RoE
21.3
19.9
18.6
17.7
21.1
23.2
B/S ratios (%)
CASA Ratio
0.23
0.28
0.36
0.36
0.38
0.39
Credit/Deposit Ratio
0.8
0.9
0.9
1.0
1.0
1.0
Asset Quality (%)
Gross NPAs
0.41
0.76
1.52
1.28
1.25
1.25
Gross NPAs (Amt)
313
749
2,018
2,626
3,434
4,465
Net NPAs
0.12
0.29
0.81
0.64
0.55
0.50
Net NPAs (Amt)
87
284
1,072
1,312
1,511
1,786
Credit Cost on Advance
0.45
0.55
0.60
0.76
0.70
0.70
Provision Coverage
72%
62%
47%
50%
56%
60%
Per Share Data (`)
EPS
8.7
11.0
14.5
18.3
25.8
34.1
BV
50.7
59.9
95.8
111.8
133.0
161.0
ABVPS (75% cover.)
50.7
59.4
93.3
109.0
130.2
158.1
DPS
1.8
2.0
2.4
2.7
4.7
6.1
Valuation Ratios
PER (x)
42.5
33.6
25.6
20.2
14.3
10.9
P/BV
7.3
6.2
3.9
3.3
2.8
2.3
P/ABVPS (x)
7.3
6.2
4.0
3.4
2.8
2.34
Dividend Yield
0.5
0.5
0.6
0.7
1.3
1.7
Note - Valuation done on closing price of 27/07/2018
July 27, 2018
5
Yes Bank | Q1FY2019 Result Update
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
DISCLAIMER
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL and
Portfolio Manager and Investment Adviser with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking
Limited is a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration
number INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for
accessing /dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed
public offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot
testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.
While Angel Broking Limited endeavors to update on a reasonable basis the information discussed in this material, there may be
regulatory, compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from
or in connection with the use of this information.
Disclosure of Interest Statement
Yes Bank
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
July 27, 2018
6