Introduction
YES Bank, one of India’s prominent private sector lenders, is set to announce its Q4 results today, revealing the financial performance for the quarter and year ending March 31. Analysts anticipate strong profit growth, despite potential moderation in net interest income (NIIs) and net interest margins (NIMs).
YES Bank’s Q4 Results Overview
The bank’s Q4 earnings are expected to demonstrate a robust performance in terms of bottom line. Despite concerns about rising costs of funds impacting NIIs and asset quality, the bank remains poised to deliver substantial growth in profits.
Profit and Growth Expectations
Analysts forecast YES Bank’s net profit to rise significantly year-over-year (YoY) and quarter-over-quarter (QoQ). The management’s roadmap for normalization, particularly regarding asset quality, cost of funds, and returns, is a key aspect to monitor.
Net Interest Income and Asset Quality
The expected moderation in net interest income and net interest margins stems from higher costs of funds. Asset quality may also face challenges due to the evolving economic landscape.
JM Financial’s Perspective
JM Financial anticipates YES Bank’s net profit to reach Rs 427.2 crore, representing substantial growth of 111.1% YoY and 84.6% QoQ. However, pre-provisioning operating profit (PPOP) may decrease by 22.5% YoY and 20.3% QoQ, with NIIs potentially slipping by 3% YoY but increasing by 1.3% QoQ.
Anand Rathi Research’s Perspective
Anand Rathi Research projects a net profit of Rs 252 crore, with a YoY increase of 24.5% and a QoQ rise of 8.9%. PPOP is expected to see a slight rise of 0.8% YoY and 3.9% QoQ. NIIs may dip by 3.8% YoY and remain flat QoQ. The brokerage currently recommends a ‘sell’ rating on YES Bank stock.
Kotak Institutional Equities’ Perspective
Kotak Institutional Equities estimates YES Bank’s NII at Rs 2,105.3 crore, a QoQ increase of 3.8%, but down 0.6% YoY. PPOP may rise by 11.8% QoQ and 8.7% YoY. The bank’s net profit could reach Rs 202.4 crore, marking a 30.4% YoY increase and a 14% QoQ gain.
Market Performance
YES Bank’s shares closed at Rs 26.15 during the Friday trading session, rising by nearly three-fourths of a percent. The bank’s total market capitalization exceeds Rs 75,000 crore.
Key Brokerages’ Views
Various brokerages forecast a decline in NIMs and PPOP due to increased costs of funds. Nuvama Institutional Equities predicts a 15 bps decline in NIMs, leading to a 2% fall in NII. Core PPOP may decrease by 13% during the quarter due to higher costs.
Balance Sheet and Liquidity Coverage
YES Bank’s loan growth stands at 12% YoY, while deposit growth shows robust progress at 22.5% YoY, particularly in CASA deposits. The CASA ratio improved to 30.9%, while the credit-to-deposit ratio moderated to 86%. Liquidity coverage ratio (LCR) remained stable at 116%.
Long-Term Outlook
Nomura expects YES Bank to deliver an RoA of 0.5% and 0.8% in FY25F and FY26F, respectively. The bank’s RoE is projected to be 4.5% and 7.5% in FY25F and FY26F, respectively. YES Bank’s return profile is improving but still lags behind industry peers.
Conclusion
In conclusion, YES Bank’s Q4 results are anticipated to showcase strong profit growth, despite some challenges in net interest income and asset quality. While the bank’s performance remains promising, there is a need for continued focus on asset quality, cost management, and overall operational improvement.
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FAQs
- What is YES Bank’s projected net profit for Q4?
- Analysts expect YES Bank’s net profit to reach Rs 427.2 crore, according to JM Financial.
- What are the expected trends in net interest income?
- Net interest income may experience slight moderation due to rising costs of funds.
- How is the asset quality expected to perform?
- Asset quality may face challenges, and continued improvement will be necessary.
- What are the predictions for loan and deposit growth?
- Loan growth is expected at 12% YoY, while deposit growth is anticipated to be robust at 22.5% YoY.
- What is the long-term outlook for YES Bank?
- YES Bank’s RoA is projected to improve to 0.5% and 0.8% in FY25F and FY26F, respectively, while its RoE is expected to rise to 4.5% and 7.5% in FY25F and FY26F, respectively.
