YES Bank Ltd. Q2 FY18 Result Update Rating - HOLD - Arihant Capital Markets

Total Advances grew by 35% to Rs 1,48,675 crore as at Q2 FY18. Corporate banking accounted for 67.4% of the Advances portfolio while Retail & Business Banking constituted 32.6% due to increase in consumer banking and business banking. Total Deposits grew by 23.4% to Rs 1,57,990 crore. The CASA deposits grew by 51.4% Y-o-Y to Rs 58,724 crore taking up the CASA ratio to 37.2% up from 36.8% in the corresponding quarter on. Savings account deposits increased by 51.6% Y-o-Y. Current account deposits increased by 51.1% Y-o-Y.

Aided by strong growth in advances and deposits, NII jumped by 33.5% to Rs 1,885 crore and non-interest income increased by 35.4% and stood at Rs 1248 crs. Net profit for the bank grew by 25% Y-o-Y to Rs 1002 crores.

Gross NPAs increased from 0.97% to 1.82% on QoQ basis, and net NPAs also increased to 1.04% from 0.39%.There was no new restructuring. One account of Rs.161.0 Crores was upgraded from Restructured to Standard Asset. One account of Rs.192.4 Crores was restructured under Outside Standard SDR scheme of RBI. One account of Rs.89.5 Crores was refinanced under 5:25 scheme.

Total Capital funds for the bank stood at Rs 35,690 crores (54%) of which Tier 1 capital stood at 13.2%. Total risk weighted assets stood at Rs 2,00,138 crores.RWA to total assets stood at 84.3%. The daily average liquidity coverage ratio stood at 90.6%.

As on 30 Sept, 2017 total headcount for the bank stands at 20,932, an increase of 726 employees in the quarter and 2,401 incremental employees since Sept 30, 2016. The Bank's branch network stood at 1040 branches, an addition of 20 branches in the quarter and total ATM network stands at 1,823. Cost to income ratio decreased to 39.2% from 40.6% Y-o-Y.

Valuation

YES Bank has delivered satisfactory performance across key financial parameters of growth and profitability driven by steady expansion in NIMs to 3.7%. Bank's comprehensive product offerings continue to enable a healthy and granular credit growth. Bank posted increasing share of retail fees, liabilities & advances. Asset quality saw a deterioration with GNPAs & Net NPA increasing to 1.82% & 1.04% respectively. We have valued the bank at 3.2(x) its FY19E adj. book value and have arrived at fair value of Rs 332 per share. At CMP of Rs 307, the stock is trading at P/ABV(x) of 3.0x its FY19 ABV. We have 'HOLD' rating on stock.

Shares of YES BANK LTD. was last trading in BSE at Rs.314.35 as compared to the previous close of Rs. 314.4. The total number of shares traded during the day was 832731 in over 8677 trades.

The stock hit an intraday high of Rs. 319.2 and intraday low of 311.5. The net turnover during the day was Rs. 263283706.

Source : Equity Bulls

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