Key Data

CMP Rs 169

Sector Banking

Face Value Rs.10

BSE Code 532648

52 Week H/L Rs 278/ 120

Market Cap Rs 5012 Cr

Investment Rationale

YES BANK is a private Indian bank promoted by Rana Kapoor and Ashok Kapur with financial support from Rabobank Nederland, and global institutional private equity investors. YES BANK has 67 operational branches across 57 locations nationally, YES BANK has received additional licenses to open 57 new branches and 125 offsite ATMs taking the total licensed network to 117 branches and 200 Offsite ATM’s. YES BANK is steadily building corporate and institutional banking, financial markets, investment banking, corporate finance, business (SME) and transactional banking, retail banking and wealth management business lines across the country.

Net profit of the bank has shown extraordinary growth of 108percent qoq in Q3FY08 driven by controlled operating expenses and expansion in the NIM. Advances of the bank has grown by 50percent qoq and deposits by 61percent (qoq) and CASA deposits by 138.2percent (yoy) for the same period. The bank has ROA of 1.61percent ahead than other private sector banks. For the first time in the history of Yes Bank, it reported Gross NPA of 0.11percent and Net NPAs of 0.09percent.

Q4FY08 margins of the bank improved by 71 bps YoY and 12 bps QoQ to 2.81percent on the back of reduced dependence on the bulk deposits coupled with improvement in the CASA (Current Account &Savings Account) ratio and expansion in the investment yield. Importantly, advances yield of the bank declined on sequential basis by 44 bps to 12.2percent. This signals that bank has diverted more of its loans towards corporate clients enjoying higher spreads to Prime Lending Rate (PLR)

Yield on Assets 10.05 9.16 89 10.03 2

Cost of Funds 7.75 7.93 -18 7.98 -23

Advances Yield 12.23 10.58 165 12.67 -44

Investments Yield 9.14 7.53 161 8.94 20

NIM 2.81 2.1 71 2.69 12

In line with the industry trend, margins of the bank have improved by 14 bps to 2.5percent in FY08 on account of faster repricing of loans than deposits. The bank expects to sustain margins at the current levels even in FY09.

Yield on Assets 9.74 8.1 164

Cost of Funds 7.5 5.99 151

Advances Yield 11.84 9.72 212

Investments Yield 8.98 6.83 215

NIM 2.5 2.36 14

Net Profit of the bank showed a growth of 108percent to Rs64.50Crore during the quarter. Advances of the bank increased by 50percent to Rs.9430Crore and deposits increased by 61percent to Rs.13273Crore during the quarter. Profit growth was supported by lower operating expenses and Margin improvements, which was supported by higher investment yields and a decline in cost of funds.