FREE

MOSL: YES BANK (Buy)-Inline-Asset quality impacted by one off large account

​Yes Bank: Inline; Asset quality impacted by one off large account

(YES IN, Mkt Cap USD11.3b, CMP INR1605, TP INR2110, 31% Upside, Buy)

• Yes Bank's (YES) NII grew 32% YoY (+10% QoQ) to INR16.4b, helped by 20bp YoY NIM improvement (to 3.6%) and customer assets growth of 36% YoY (+15% QoQ). Strong NII and beat on other income (27% beat; +57% YoY) drove PPoP outperformance (+38% YoY; 14% beat). However, significantly higher provisioning led to in line PAT at INR9.1b (30% YoY).
  
• In absolute terms, GNPA doubled to INR20.2b led by one large lumpy account that slipped during the quarter (as per RBI directive; expected to recover in 1QFY18). This includes one borrower with gross exposure of 0.69% of gross loans (INR9.11b) and net exposure of 0.52% (INR6.84b) which is expected to be recovered in near term. Specific provision held in this account is INR2.27b. There was a sale to ARC of 3 accounts during the quarter of ~INR8.9b (of which INR7b is received as SR).
  
• Overall deposits grew 8% QoQ and 28% YoY to INR1.4t led by continued CASA inflows. Liability franchise strengthened further with CASA ratio improving 300bp QoQ to 36.3%, led by a) bulky CA deposits received in last two weeks of March, and b) strong traction in SA deposits (+12% QoQ).
  
• Other highlights: a) Loans grew 35% YoY to INR1.3t b) Retail fee income showed robust growth of 77% YoY and 19% QoQ, and c) YES raised INR49b through QIP leading to 150bp QoQ increase in CET 1 ratio to 11.4%