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MOSL: YES BANK (Buy)-RBI approves appointment of new MD & CEO-Key overhang addressed

YES BANK: RBI approves appointment of new MD & CEO; Key overhang addressed; clarity on other issues to aid re-rating

(YES IN, Mkt Cap USD7b, CMP INR214, TP INR270, 26% Upside, Buy)

 

Yes Bank has received the RBI approval to appoint Mr Ravneet Gill as the new MD & CEO effective Mar 01, 2019. The appointment of the new MD & CEO has removed a big overhang from the stock, which has seen significant correction since the RBI’s denial of Mr. Kapoor’s continuation as Yes Bank’s MD & CEO. Also, induction of new members on the board of YES Bank after the departure of several board members should help address key strategic issues and concerns facing the bank. Further, with this appointment the strength of Yes Bank’s board is now fully restored (please refer inside for details). With management overhang done away with, we expect the bank to address other challenges which will help drive gradual improvement in operating performance. We maintain BUY rating with PT of INR270 (unchanged).

 

Brief profile of Mr. Ravneet Gill

• Ravneet Gill has been the CEO of Deutsche Bank, India, since Aug’12 and a member of its Asia-Pacific Executive Committee. Prior to this, he was Head of Capital Markets & Treasury Solutions of Deutsche Bank, India. Mr. Gill has over 26 years of banking experience across structured financing, foreign exchange, transaction banking, risk management and private banking. He joined Deutsche Bank in 1991 in Private Wealth Management and moved to the Corporate Banking in 1993. In 2003, Mr. Gill took over as Head of Corporate Banking Coverage and held the position till Dec’08 when he was appointed Head of Coverage for Global Markets. He became the Head of Capital Markets and Treasury Solutions, India in 2011.

 

• Snapshot of Deutsche Bank India performance: Under Mr. Gill’s leadership, Deutsche Bank, India, saw its PAT grow at 6% CAGR over FY14-18 to INR9.1b, while NII/PPoP growth over the same period stood at 5%/8% CAGR. The bank has delivered RoA of 1.14% in FY18. Deposits grew at a CAGR of 18% over FY13-18 while advances growth was modest at 12%. The banks’ advance/deposit base stood at INR392.5b/INR473.6b as at FY18. GNPL / NNPL ratios stood at 2.56%/0.78% with a PCR of ~70%. The bank has healthy capitalization ratio with total CAR of 15.2% (Tier1 at 14.6%).