Yes Bank Shares Gain on Robust Q1 Numbers, But Flattish Sequential Growth Weighs

Shares of Yes Bank saw an uptick on Wednesday following a strong first-quarter performance, marked by steady earnings and improved asset quality. However, the sequential growth figures were less encouraging.

Historical Context:

Yes Bank, established in 2004, has been a significant player in India’s private banking sector. The bank faced a severe crisis in 2020, leading to a restructuring plan backed by the Reserve Bank of India (RBI) and a consortium of banks led by State Bank of India (SBI). This historical backdrop is crucial for understanding the bank’s current performance and market reactions.

Key Highlights:

1. Loan and Advances Growth: Yes Bank reported a 15% year-on-year increase in loans and advances for the first quarter ending in June, reaching ₹2.29 lakh crore compared to ₹2 lakh crore in the same quarter last year.

2. Deposit Growth: Deposits saw a 21% year-on-year rise, climbing to ₹2.64 lakh crore from ₹2.19 lakh crore a year earlier.

3. Credit-to-Deposit Ratio: The bank’s credit-to-deposit ratio dropped to 86.4% for the first quarter, down from 91.3% in the same period last year, indicating a more conservative lending approach.

4. Liquidity Coverage Ratio: The liquidity coverage ratio improved to 137.8% in the June quarter, reflecting better liquidity management.

5. Sequential Performance: Despite the annual growth, deposits slightly decreased to ₹2.65 lakh crore, down 0.5% from ₹2.67 lakh crore in the previous quarter, raising concerns about sustained growth.

6. Profit Surge: In the March quarter, Yes Bank posted a 123% year-on-year increase in profit, reaching ₹452 crore, with net interest margins (NIMs) steady at 2.4%.

7. Balance Sheet Expansion: The bank’s balance sheet crossed the ₹4 lakh crore mark during the fourth quarter of the previous fiscal year, driven by growth in SME and mid-corporate advances and renewed growth in the corporate segment.

8. Operational Adjustments: Recent reports indicated that the bank was conducting wide-scale layoffs to reduce operational costs and boost operating profit.

9. Stock Performance: Yes Bank’s share price increased by 0.88% to ₹24.06 in early morning trade on Wednesday. However, the stock has only gained 6.23% this year, underperforming the Nifty 50’s 11.7% gain.

Summary:

• 15% YoY growth in loans and advances.
• 21% YoY increase in deposits.
• Credit-to-deposit ratio decreased to 86.4%.
• Liquidity coverage ratio improved to 137.8%.
• Sequential deposit decline by 0.5%.
• 123% YoY profit surge in the March quarter.
• Balance sheet crossed ₹4 lakh crore.
• Wide-scale layoffs reported.
• Stock price up by 0.88%, but underperformed Nifty 50.

This comprehensive overview provides students with a clear understanding of Yes Bank’s recent performance, historical context, and key financial metrics, essential for competitive exam preparation.