Yes Bank - Q1FY14 Result Update - GEPL Capital

Macro Impact:

It has revised it's base rate 10.75% ( increase of 0.25%) effective from 01st August 2013. The bank also announced the revision of it's deposit rates by 0.25% to 0.5% in select tenors. This provides an opportunity for retail depositors to lock in higher rates on term deposits. As the bank has passed the enhanced cost to the borrowers it's Net Interest Margin would not be affected which means the bank would be able to maintain it's NIM to ~3% which is good enough in this scenario. But increasing rates also have another side of the coin, which is increased cost of funding may drive some business away from NBFC's & also deposits away from Money Market Mutual Funds.

Q1FY14 Result Update Summary

The yield on the corporate bond portfolio is around 10.75-11%. There could be some losses on individual corporate bonds but on an overall basis there are no losses in the corporate bond portfolio currently. The staff costs were higher (up 30% Y-o-Y & 16% Q-o-Q) mainly because of a 13% increase in salary increments and addition of 434 employees in 1Q14. The increase in credit costs (82bp) was mainly because of a Rs. 750 MM countercyclical buffer created in Q1FY14. Some of the legacy accounts in the restructured assets are repaying. The bank has not restructured any loans in Q1FY14. Bank has opened 45 branches and 100 ATMs during Q1 FY14 and expects to open another 50-75 branches during rest of the Financial year. As on June 30, Bank has 475 branches and 1051 ATMs. CASA has improved 61% Y-o-Y and currently stands at 20.2%. Bank's board has given approval to raise upto USD 500mn by diluting upto 9.98% stake by end of the calendar year. Management has indicated that fund raiding plan is intact and has reposed confidence that it will successfully raise capital after showing second quarter performance so that investors confidence could be restored before the crucial exercise.

Source : Equity Bulls

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