YES Bank was among 43 corporates that attended the recently concluded ICICI Securities‘ India Financials Conference 2023. Sunil Parnami, Head Investor Relations at YES Bank participated in the conference, with ICICI Securities later coming up with key takeaways from Parnami’s commentary.
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The private lender, ICICI Securities said, believes its core franchise is gaining good momentum. YES Bank is making strong progress in its chosen areas, sticking to its return on asset (RoA) guidance, ICICI Securities said.
YES Bank, the brokerage said, believes the maximum expansion in RoA would come from margins. The bank noted that slippages in the September quarter were disproportionately higher from unsecured loans and credit card.
“However, overall asset quality is progressing very well. Credit cost will remain benign in the near-term. Guidance at 50 bps,” ICICI Securities said in its takeaways note.
YES Bank believes the cost of funds has almost played through and yields are likely to improve as RIDF (rural infrastructure development fund) drag subsides.
The RIDF drag, YES Bank said, is upwards of 40 basis points and margins are likely to improve with this drag gradually subsiding.
“The RIDF balances are likely to inch up in H2FY24 and a decline in RIDF balance would start from FY26. It is looking for both organic and inorganic opportunity to address PSL (and RIDF) drag,” ICICI Securities noted.
ICICI Securities noted that YES Bank would like to maintain loan mix of retail at 50 per cent, retail and MSME combined not beyond 65 per cent and corporate not exceeding 35 per cent.
“Select prime retail products like home loan and car loan do not make commercial sense currently for the bank due to lower yields and higher competition. Hence, it has started slowing down in these segments,” ICICI Securities noted.
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The bank, ICICI Securities said, believes cost-to-income ratio should start moderating going ahead and that fees-to-assets should improve further hereon. he ratio has already moved from 90 bps to 130 bps in the past 18 months.
