Maintain 'hold' on Yes Bank - Geojit BNP Paribas

- 3QFY13 net profit at Rs. 340 crore up 34.7% yoy and 11.8% qoq. Slightly better than analysts' estimates.

- NII at Rs. 580 crore up 36.7% yoy and 11.5% qoq driven by expected NIM expansion of 10 bps qoq.

- Other income grew 48% yoy and 13% qoq helped by financial advisory income (up 101% yoy and 36% up qoq.

- Core operating profit (excluding advisory and treasury) grew 34% yoy and 13.8% qoq.

- Loan growth flattish at 22.3% yoy and 4.4% qoq, investment up by 35.7% yoy and 11.5% qoq and credit substitutes up 27.4% yoy and 3% qoq. The bank is expected to gain substantially from its strategy when the rates decline.

- GNPA and NNPA declined qoq and PCR (provision coverage ratio) was healthy at 80%.

- Contingent provision of Rs.20 crore made restructured loans flat qoq at 0.4% of loans.

- CASA ratio improved to 18.3% 17.3% on higher savings.

- Savings to total assets rose from 10.9% to 11.9%. Costs of funds declined 20 bps to 8.5% reflecting a moderation in wholesale rates as well.

- Yields declined 10 bps to 12.3% leading to a 10 bps qoq margin improvement to 3%.

- In troubled Deccan exposure, technically it is still a performing asset, with 80% is provided till date.

- Asset quality improvement is commendable, but its sustainability remains in question.

- Bank's strategy of funding retail expansion with investment banking revenue is attractive.

- Hold rating on the stock is maintained.

Source : Equity Bulls

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