Categories Concall Highlights, Earnings, Finance

Yes Bank Limited Q3 FY24 Earnings Conference Call Insights

Key highlights from Yes Bank Limited (YESBANK) Q3 FY24 Earnings Concall

  • Deposit Growth
    • 15% Y-o-Y growth in deposits excluding certificates of deposit.
    • CASA ratio improved to 29.7% from 29.4% last quarter.
    • Branch banking deposits grew 22% Y-o-Y.
  • Margin and Advances
    • NIM expanded by 10 bps Q-o-Q to 2.4%, driven by balance sheet management despite flat yields.
    • Sustained growth seen in SME; 24% Y-o-Y and mid-market; 26.4% Y-o-Y.
    • Helps drive core fee income and low cost funds.
    • 30 bps Q-o-Q reduction seen in net NPAs.
    • Net carrying value of SRs also improved to 1.7% of advances.
  • Cost of Funds Outlook
    • Bulk of repricing absorbed till September 2022.
    • Minimal impact seen over next 1-2 quarters.
    • Efforts on for deposit mobilization to continue.
  • Retail Portfolio Slippages
    • Driven by unsecured assets segment.
    • Measures taken to tighten credit processes and scorecards.
    • Expect slippages to plateau before starting to decline.
  • CASA Growth Drivers
    • Focused execution plan for CASA mobilization.
    • Alignment of incentives for customer acquisition and balance retention.
    • Operating at lower CASA ratio currently provides headroom.
  • Personal Loans Portfolio
    • Concerns mainly in new to credit and low income segments.
    • Measures taken like tighter credit norms and income thresholds.
    • Expect slippages to plateau before declining going forward.
  • Security Receipts Realization
    • Redeemed INR2,500 crores out of INR1,853 crores SRs in one year.
    • Remaining SRs carrying value reduced to 0.8% with 73.2% coverage.
    • Guidance to reduce net NPAs and SRs below 1% in coming quarters.
  • PSL Compliance
    • PSL compliance improving but 11% of assets still in lower yielding RIDF.
    • This drags ROA, making 1% target unlikely by FY25; FY26 more realistic.
    • Working on PSL compliance through organic channels and inorganic acquisition.
    • Expect minimal PSL non-compliance by FY24 across subcategories.
  • Retail Portfolio
    • Higher retail slippages this quarter, especially in personal loans.
    • Taking corrective actions to plug slippages and normalize delinquency.
    • Seeing recoveries and upgrades helping contain net slippages to 1-1.1%.
    • Retail portfolio growth steady around 13-15%.
  • Corporate Portfolio
    • New corporate disbursements being offset by repayments of legacy loans.
    • Legacy loans being consciously reduced, especially in real estate and hospitality.
    • Net degrowth in corporate book as legacy loans repaid.
    • New disbursements focused on working capital and transactional lending.
  • ROA Outlook
    • 1% ROA target important but focused on core operating profit delivery.
    • Unlikely to achieve 1% ROA by FY25 due to drags like RIDF.
    • More realistic timeline FY26 based on strategy execution.
    • Priority to reduce drags like SRs while boosting core profitability.
  • Market Profit Expectation
    • Focus is on long-term ROA path, not beating quarterly expectations.
    • Communicated 1% ROA target as a 2-3 year journey requiring execution.
    • External factors like interest rates impacted profitability this quarter.
    • Priority is strengthening fundamentals like PCR, not profit beats.
  • Security Receipts
    • Gross SRs reduced from INR8,000 cr to INR6,000 cr, 25% decline.
    • But net SRs just 0.8% of advances or INR1,850 cr due to provisions.
    • Once provisions become zero, recoveries will boost profits.
    • SR resolutions already benefiting NII currently.

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