YES Bank Q1FY20: Angel Broking

Mr. Jaikishan Parmar (Sr. Equity Research Analyst - BFSI, Angel Broking):

"For Q1FY20, NII Grew moderately by 3% primarily owing to compression in spread and NIM. Treasury gains provided relief to profitability, during quarter bank reported treasury gain of 450cr. Bank provision remained elevated at Rs.1,959Cr. Due to moderate increase NII and elevated provision PAT declined 91% YoY to Rs.114cr.

Banks Asset quality has been deteriorated from 1.31% in Q1FY19 to 5.01% in Q1FY20. Provision coverage stands at 43% any delay in recovery from an existing book or fresh slippage would require higher provision would keep PAT alleviated.

Key Concern for investor are 1) increase in BB & Below book 2) CET 1 at 8.04%, Regulatory requirements 8%. Lower CET 1 would a) impair banks' ability to raise fund at a higher valuation 2) In further rating downgrade (Advance & Investment) would require the bank to make more charge for degrading advance/investment and consequently, CET could fall below the regulatory requirement. 3) Slippage trend for the next few quarters from BB& below book."

Source : Equity Bulls

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