Yes Bank Q4 Profits Beat Expectations: Should you Buy/Hold?

As bad loans are tumbling out of the closet, the crisis is deepening, inefficiencies are bloating in the market, it has become quite clear that the banking stocks are under a pressure! But the Yes Bank Q4 profits has brought smiles plastered to our faces.

Yes Bank Q4 Results – Key Takeaways

Net interest Income

The net interest income for the quarter leveled upto 31.4 percent YoY to Rs 2,154.20 crore while the non interest income increased by 13 percent to Rs 1,421 crore. The NPA kneeled down to 1.28 percent of total advances as on March 31 from 1.72 percent in 2017. Net NPA was recorded at 0.64 percent as compared to 0.93 percent in the December quarter.

Particulars	Q4FY18 (in cr.)	Q4FY17 (in cr.)	Remarks
GNPA	1.28%	1.52%	Credit Cost for FY18 at 76 bps
NNPA	0.64%	0.81%
PCR	50.0%	46.9%

Non Interest Income and Operating profit

Non Interest Income increased by 13% y-o-y basis as compared to Rs 1,421 crore for FY 2018 and operating profit increased to Rs 2,135.43 crore in FY 2018  as compared to the previous year.

Profit

Particulars	Q4FY18 (in cr.)	Q4FY17 (in cr.)	Growth%
Operating Profit	2135.4	1691.0	26.3%
Profit After Tax	1179.4	914.1	29.0%

Yes Bank registered a quarterly rise in the net profit of Rs 1,179.40 crore, which was higher than the estimates predicted of Rs 1,065 crore.

Net Interest Margin

The net interest margin was reduced to 10 basis points to 3.4 percent for the March quarter as compared to previous quarter.

Credit and loan growth

The advances and loans of the bank were increased by 53.9 % y-o-y basis to Rs 2.03 lakh crore due to its robust growth and advances provided to MSME and retail business. Retail banking advanced increased to 99.1% YOY and its proportion to total advances improved by 12.2% at the end of March 2018.

Deposit Growth

The deposit growth increased by 40.5 points, apart from that the gross NPA has reduced to 11.7 percent lower to Rs 2,626.80 crore and Net NPA stood at Rs 1,31,75 crore, down by 17.7%, as compared to the last quarter.

Provision

In lieu to safeguard the investments, the bank made extra provisions worth Rs 399.60 crore for the March quarter, which was 29% more than 309.70 crore.

Dividend

The bank has even recommended the dividend of Rs 2.7 per share, subject to the approval.

Read the full report on financial results at https://t.co/KUv5BlkHBs #YESBANKResults

— YES BANK (@YESBANK) April 26, 2018

Should the investor Buy/Hold?

Yes Bank has been a steady performer in terms of asset quality growth as well as maintaining margins and profits. Its proactive steps and effective monitoring has resulted in low NPA and high profit margin. We have become much more positive after looking the bank performance. The stock of Yes Bank is trading at Rs 358.15, which we believe is optimal. The investors should maintain a  Buy rating on the stock.