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Informist, Thursday, Jul. 17, 2025
By Sourabh Kumar
MUMBAI – YES Bank is expected to perform worse sequentially in the June quarter, pressured by a decline in its net interest margin. However, the private sector lender's bottom line is expected to see steady growth year-on-year due to a steady rise in its non-interest income.
YES Bank is expected to post a net profit of INR 6.20 billion for the June quarter, according to the average of estimates from six brokerage firms. Emkay Global Financial Services Ltd. has the lowest estimate of INR 5.39 billion for net profit while ICICI Securities has the highest estimate of INR 7.50 billion.
The bank's net interest income is expected to decline 0.5% year-on-year to INR 22.34 billion in the June quarter, while sequentially the decline is expected to be more pronounced at 1.9%. Kotak Institutional Equities said in a report that the bank's net interest income may have fallen 1.5% quarter-on-quarter in Apr-Jun, but would be largely stable year-on-year.
Kotak Institutional Equities expects YES Bank's net interest margin to fall 10 basis points sequentially to around 2.3% in the June quarter, "but there is likely to be a lot of volatility given the nature of income booked when security receipts mature and impact of Rural Infrastructure Development Fund investments," it said.
Nomura Equity Research expects YES Bank's net interest margin to decline 15 bps sequentially to 2.4% in the June quarter. The year-on-year decline is expected to be much lower at 5 bps, it said. Emkay Global Financial Services said "slower growth, margin compression...should keep earnings (of YES Bank) in check."
ICICI Securities, however, expects YES Bank's June quarter net interest margin to expand 14 bps on year and 4 bps on quarter to 2.5%. It also provided the highest estimate of YES Bank's net interest income in the June quarter. It said the net interest income is likely to have risen by 4.8% on year and 3.3% on quarter to INR 23.52 billion in the quarter.
The bank's credit cost is expected to have inched up in the June quarter, according to most brokerages. Nomura expects YES Bank's credit cost to rise 19 bps year-on-year and 4 bps sequentially to 0.6% in the June quarter. JM Financial Institutional Securities Pvt. Ltd. also sees the bank's credit cost rising to 0.6% in the June quarter.
However, Kotak Institutional Equities see the bank's credit cost declining by 5 bps year-on-year and 20 bps on quarter. ICICI Securities also expects the credit cost to fall in the June quarter to 0.1%, amongst the lowest in the industry.
As per provisional operational data reported by YES Bank, it's gross advances rose 5.1% on year to INR 2.41 trillion as on Jun. 30. However, advances were down 2% sequentially. Deposits grew even slower, and rose 4.1% on year to INR 2.76 trillion. Deposits were, however, down 3% sequentially. The current account-savings account deposit ratio of the bank moderated to 32.7% as on Jun. 30 from 34.3% at the end of March. The bank's liquidity coverage ratio was 135.7% as on Jun. 30, up from 125% at the end of March but slightly lower than 137.8% as of Jun. 30, 2024.
Japan's Sumitomo Mitsui Banking Corp. has acquired a 20% stake in YES Bank and has sought approval from the Reserve Bank of India to acquire an additional 4.9% stake.
The bank's return on assets is expected to improve year-on-year but is likely to fall sequentially. YES Bank's return on assets is expected to rise 9 bps on year to 0.6%, but is likely to have declined 12 bps quarter-on-quarter, as per Nomura Equity Research. ICICI Securities, on the other hand, expects the return on assets to rise on a year-on-year basis, and remain unchanged from the previous quarter. JM Financial Institutional Securities expects the bank's return on assets to remain steady from last year.
YES Bank will detail its June quarter earnings Saturday. At 1305 IST, shares of the bank were down 0.4% at INR 20.16 on the National Stock Exchange. Since previous quarter's earnings, the share price of YES Bank has risen by 7.2%.
Of the three brokerage reports on YES Bank available with Informist, two have a 'sell' rating with an average target price of INR 16, while another brokerage firm has a 'hold' rating with an average target price of INR 18.
Following are the Apr-Jun earnings estimates for YES Bank based on reports from six brokerage firms in descending order of the estimate of net profit:
|
Brokerage Name |
Net Interest Income (in INR million) |
Net Profit (in INR million) |
|
ICICI Securities Ltd |
23,523.00 |
7,499.00 |
|
Anand Rathi Share and Stock Brokers Ltd |
22,353.00 |
6,820.00 |
|
Nomura Equity Research |
21,100.00 |
6,300.00 |
|
JM Financial Institutional Securities Pvt Ltd |
22,582.00 |
5,610.00 |
|
Kotak Institutional Equities |
22,421.00 |
5,597.00 |
|
Emkay Global Financial Services Ltd |
22,048.00 |
5,391.00 |
|
Average |
22,337.83 |
6,202.83 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Ashish Shirke
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