Yes Bank - 4QFY2011 Results Flash

Yes Bank announced its 4QFY2011 results today, registering strong net profit growth of 45.2% yoy (6.4% qoq) Rs203cr, better than our estimate of Rs181cr mainly on account of higher other income and robust advances growth. Both Advances and Deposits grew by robust 54.8% yoy (10.5% qoq) and 71.4% yoy (16.4% qoq), respectively compared to industry advances growth of 21.4% yoy (4.7% qoq) and deposits growth of 15.8% yoy (5.0% qoq). CASA deposits increased by 68.6% yoy (17.6% qoq). However CASA ratio declined by 20bp yoy to 10.3%.  Given the recent rise in interest rates and the bank’s wholesale-based funding mix, its cost of funds increased by 70bp qoq.  Reported NIMs remained flat at 2.8% sequentially. Non-interest income grew at a moderate rate of 16.6% yoy. Operating profit increased by 35.4% yoy. The cost-to-income ratio during the quarter improved to 34.8% from 35.8% in 3QFY2011 and 36.3% in 4QFY2010. Asset quality of the bank improved with Net NPAs declining by 47.4% sequentially. Gross NPA and Net NPA ratio for the quarter came in at 0.23% and 0.03%, respectively. Provision coverage ratio (excluding technical write-offs) improved to 88.6% from 76.1% in 3QFY2011. The bank’s CAR stood at 16.5% with Tier- I CAR at 9.7%.

Currently the stock is trading at 2.1x FY2013E ABV. We maintain an Accumulate rating on the stock with a Target Price of Rs351.

Exhibit 1: 4QFY2011 Actual vs. Estimates
(Rs cr)	Actual	Estimates	Var (%)
Net interest income	349	329	6.1
Non-interest income	187	165	13.3
Operating income	535	493	8.5
Operating expenses	186	182	2.3
Pre-prov. profit	349	311	12.1
Provisions & contingencies	43	30	44.3
PBT	306	281	8.6
Prov. for taxes	102	100	1.9
PAT	203	181	12.3

  Source: Company, Angel Research

Exhibit 2: 4QFY2011 Performance summary

(Rs cr)	4QFY2011	3QFY2011	% chg (qoq)	4QFY2010	% chg  (yoy)
Interest earned	1,223	1,126	8.6	665	84.0
Interest expenses	874	803	8.9	420	107.9
Net interest income	349	323	7.8	244	42.7
Non-interest income	187	162	15.5	160	16.6
Operating income	535	485	10.4	404	32.4
Operating expenses	186	174	7.4	147	27.1
Pre-prov. profit	349	311	12.1	258	35.4
Provisions & contingencies	43	25	73.4	43	1.6
PBT	306	286	6.7	215	42.1
Prov. for taxes	102	95	7.3	75	36.2
PAT	203	191	6.4	140	45.2
EPS (Rs)	5.9	5.5	5.8	4.1	42.1
Cost-to-income ratio (%)	34.8	35.8		36.3
Effective tax rate (%)	33.4	33.2		34.9
Net NPA (%)	0.0	0.1		0.1

Source: Company, Angel Research

Exhibit 3: Trends in NPAs

Particulars	4QFY11	3QFY11	2QFY11	1QFY11	4QFY10	3QFY10	2QFY10	1QFY10
Gross NPAs (Rs cr)	81	73	68	60	60	54	50	61
Net NPAs (Rs cr)	9	17	17	11	13	16	13	30
Gross NPAs (%)	0.2	0.2	0.2	0.2	0.3	0.3	0.3	0.5
Net NPAs (%)	0.0	0.1	0.1	0.0	0.1	0.1	0.1	0.2
NPA coverage (%)	88.6	76.1	74.7	81.4	78.4	70.1	74.9	50.5

Source: Company, Angel Research; Note: NPA coverage excluding technical write-offs