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.