Yes Bank, a private sector lender, on Wednesday reported a growth of 27.7% in its first quarter net profit. The bank earned a profit of Rs 5.51 billion for the quarter ended Jun. 30, 2015. Market was expecting profit to come at Rs 5.31 billion.
The bank's quarterly income totaled at Rs 37.97 billion, an increase of 22.75% over Rs 30.93 billion in the same period a year ago.
Net interest income (NII) for the quarter increased by 42.2% to Rs 10.59 billion on account of strong growth in advances and expansion in NIM to 3.3%. from 3.0% in Q1FY15. Non interest income increased by 31.8% to Rs 5.45 billion in for the quarter on back of continued growth across all streams. Operating profit for the quarter increased by 43.7% to Rs 9.08 billion.
We have collated views of broking firms on Yes Bank Q1 earning performance and outlook:
IIFL: ''We believe that robust loan growth, NIM expansion and a stable credit cost would drive strong 25% earnings CAGR for Yes Bank over FY15‐17 notwithstanding continued significant investments in the network. During this period, average RoA and RoE is estimated to be at impressive 1.6% and 20% respectively. Current valuation at 2.1x FY17 P/ABV (material discount to Axis Bank) is reasonable in the context of the envisaged impressive RoE delivery and earnings growth. The planned capital raising of USD 1 billion would boost book value and thus make stock valuation more attractive. Retain BUY recommendation and 12‐month target price to Rs 1,005.''
Prabhudas Lilladher: ''Bank has raised Tier‐II capital amounting to Rs 5.5 billion and has board approval to raise Tier‐I capital up to USD 1 billion (Tier-I: 10.9% currently) to support the strong growth momentum. We believe the bank has made conscious efforts to make its asset and liability franchise granular which will help improve margin profile and keep asset quality stable. Retain 'Buy' with PT of Rs 930 (2.5x Mar‐2017E ABV).''
Reliance Securities: ''The bank has successfully completed its second planning cycle Ver2.0 and has launched next planning cycle to become one of the leading banks in the country over the next five years. To support growth, the bank has taken an enabling provision to raise another USD 1 billion through ADR/GDR/QIP at the appropriate time in coming 12-24 months. The bank's ALM suggests strong growth in operating income in coming years. We expect earnings CAGR of 25.4% over FY15-17E, led by better NII and fee income coupled with moderate provision expenses. We maintain our Buy recommendation with a target price of Rs 893 based on 2.3x FY17E Adjusted book value.''
HSBC Research: ''YES reported stable-to-improving trends across its P&L except fees seeing some drag; asset quality came in better than expected with credit costs dipping to 51bp. We expect some moderation in loan growth and a pick-up in fees resulting in 19% EPS CAGR up to FY18e after factoring in an USD 800 million equity issuance at the end of this year. Maintain Buy rating with a revised TP of Rs 1,025 from Rs 1,000.''