Yes Bank - 3QFY2014 results - Angel Broking

Views of Mr. Vaibhav Agrawal (VP - Research - Banking, Angel Broking) on Yes Bank 3QFY2014 results:

"Yes Bank reported a healthy operating performance during the quarter, which was ahead of our expectations. Over the last few quarters, the balance sheet growth for the bank has moderated. Even during current quarter, aided by moderate loan book growth of 15% yoy, NII for the bank grew 14% yoy. NIMs expectedly remained flat qoq at 2.9%. Non-interest income registered healthy growth of 24% yoy, aided by robust performance of 'financial markets' segment (yoy growth of 80%) and healthy performance in segments like Retail and Transaction Banking. Gross NPAs for the bank increased by Rs. 63cr on a low base of Rs. 132cr, while net NPAs increased by Rs. 23cr on a low base of Rs. 19cr. Gross and Net NPA ratios for the bank remain well under control and amongst the best in the industry at 0.39% and 0.08%, respectively.

The bank's asset quality performance has been quite good so far, with credit costs contained well below the management guidance of 55-60bp for the year. The management had identified 'adversely labeled assets' at around 1-2% of loan book (against which they already have provisions worth 0.4% of advances), which remain vulnerable of being bad and could result in higher credit costs if they turn so. However, with yield curve now much moderate then earlier and increasing expectations of lower interest rates by early part of next fiscal, the stock is likely to re-rate as valuations would factor in the growth potential. At CMP, the stock trades at 1.4x FY2015E ABV. We recommend Buy rating for the stock with a target price of Rs. 419."

Source : Equity Bulls

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