Nirmal Bang finds Yes Bank's results in line with expectations and recommends a 'Buy'

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Yes Bank Ltd
QQ44FFYY1155RReessuullttUUppddaattee––2233AApprriill22001155
4
Recommendation BUY Growth story continues
Yes Bank reported results broadly in line with expectations. Continued traction in
loan growth and strong growth in net interest income were the key highlights of
the results. Higher provisions impacted bottom line performance and PAT
increased 28.1% YoY and 2.0% QoQ to Rs 551 cr.
 NIMs stood flat on QoQ basis at 3.2% as decline in cost of funds (28 bps
QoQ) was offset by 20 bps QoQ decline in yields on advances. We have
factored in NIMs of 3.2% for FY16E and 3.3% for FY17E on account of lower
funding cost and higher share of retail/SME loans and increasing CASA share.
 Non-interest income witnessed increase of 32.5% YoY and 10.0% QoQ led by
growth in transaction banking, retail fees segment and financial markets.
 The bank added 30 branches during the quarter taking the total branch
network to 630. Cost to income ratio stood well under control at 40.2%.
 Deposit growth stood at 22.9% YoY and 10.7% QoQ. The pace of
improvement in CASA ratio picked up with 50 bps QoQ improvement to
23.1% largely led by 34.9% YoY increase in SA deposits.
 The bank does not intend to reduce the SA deposit rate till the SA ratio
reaches 25% or CASA ratio reaches 35%.
 Advances grew 35.8% YoY and 13.4% QoQ primarily driven by retail book
(+31.3% QoQ growth). Favorable base and improving sentiment during the
quarter resulted in loan growth. Customer assets grew 25.1% YoY. We
expect loan book to grow at CAGR of 24.8% over FY15-FY17E. Management
intends the loan mix to be at 50% retail and 50% corporate.
 Gross NPA increased 12.5% QoQ and Net NPA increased 36.0% QoQ on
absolute basis. Slippages stood at Rs 54 cr (vs Rs 70 cr in last quarter).
Restructured book increased from Rs 170 cr to Rs 382 cr (on account of one
large account in the road sector) and stood at 0.5% of gross advances. There
was no sale to ARC during the quarter.
 Board has approved capital raising plan of upto US$ 1 bn by way of QIP or
ADR/GDR. The bank had raised US$500 mn in May 2014.
 The bank has declared dividend of Rs 9 per share.
Yes Bank has successfully completed the version 2.0 with marked improvement
in CASA, uptick in margins, healthy loan book growth leading to gaining market
share and relatively stable asset quality. It has successfully transformed itself
from a small size bank to mid size bank with superior return ratios. We continue
to remain positive on the bank owing to healthy growth in loan book, control
over asset quality, higher non interest income, sustainable cost to income ratio
and comparatively higher return ratios. We expect PAT to witness CAGR growth
of 23.6% over FY15-FY17E. At CMP, the stock is trading at a PE of 13.15x and
10.86x of FY16E and FY17E EPS and at an adjusted P/BV of 2.44x and 2.06x
FY16E and FY17E Adj BV. We maintain our BUY rating on the stock valuing the
bank at 2.5x P/ABV FY17E ABV with a target price of Rs965 indicating an upside
of 21.2% from current levels. We believe that Yes Bank will benefit from the
declining interest rate cycle coupled with strong growth momentum.
CMP (22/04/2015) Rs. 796
Target Price Rs.965
Sector Banking
Stock Details
BSE Code 532648
NSE Code YES
Bloomberg Code YES IN
Market Cap (Rs cr) 33241
Free Float (%) 77.94%
52- wk HI/Lo (Rs) 910/428
Avg. volume BSE (Quarterly) 346114
Face Value (Rs) 10.0
Dividend (FY 14) 90%
Shares o/s (Crs) 41.77
Relative Performance 1Mth 3Mth 1Yr
Yes Bank -3.8% -9.1% 83.2%
Sensex -1.1% -4.7% 22.5%
100
200
300
400
500
600
700
800
900
1000
Shareholding Pattern 31
st
Mar 15
Promoters Holding 22.06%
Institutional (Incl. FII) 65.71%
Corporate Bodies 2.62%
Public & others 9.61%
Silky Jain (022 39268178)
Research Analyst
silky.jain@nirmalbang.com
Year NII
(Rs crs)
Growth
(%)
PBP
(Rs crs)
Margin
(%)
PAT
(Rs crs)
EPS (Rs) PE (x)
Adj BVPS
(Rs)
P/ABV
(x)
RoE
FY14A 2,716 22.4% 2,688 60.6% 1,618 44.86 17.74 196.8 4.05 25.0%
FY15A 3,488 28.4% 3,250 58.7% 2,005 48.01 16.58 277.5 2.87 21.3%
FY16E 4,326 24.0% 4,001 58.9% 2,530 60.55 13.15 325.9 2.44 19.9%
FY17E 5,177 19.7% 4,788 59.3% 3,061 73.29 10.86 385.9 2.06 20.4%

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Yes Bank Ltd
QQ44FFYY1155RReessuullttUUppddaattee––2233AApprriill22001155
Quarterly Result Comparison
Source: Company data, Nirmal Bang Research
 The bank added 30 branches during the quarter taking the total branch network to 630. Management targets to
open 100-120 branches for FY16E.
 Provision coverage ratio declined from 76.8% in Q3FY15 to 72.0%. The bank provided Rs 51 cr on account of
accelerated provisioning.
 Capital Adequacy Ratio stood at 15.6% (Tier I at 11.5%).
 Exposure to steel sector stood at 3.3% of which 2/3
rd
is rated AA. Exposure to power sector stands at 1.7% mostly
in renewable space. Exposure to roads sector stands at 1.3% of total loan book.
 The bank is looking to open offshore banking unit in Gujarat which will allow it to improve the foreign currency
borrowing capacity.
Financial Details (Rs in cr) Q4FY15 Q4FY14 YoY (%) Q3FY15 QoQ (%) FY15 FY14 YoY
Advances 75,550 55,633 35.8% 66,607 13.4% 75,550 55,633 35.8%
Customer assets 87,153 69,640 25.1% 78,466 11.1% 87,153 69,640 25.1%
Deposits 91,176 74,192 22.9% 82,370 10.7% 91,176 74,192 22.9%
CASA 21,079 16,345 29.0% 18,623 13.2% 21,079 16,345 29.0%
CASA Ratio 23.1% 22.0% 22.6% 23.1% 22.0%
Interest Earned 3,088 2,568 20.3% 2,972 3.9% 11,572 9,981 15.9%
Interest Expended 2,111 1,848 14.2% 2,063 2.4% 8,084 7,265 11.3%
Net Interest Income 977 720 35.8% 909 7.5% 3,488 2,716 28.4%
NIMs 3.2% 3.0% 3.2% 3.2% 2.9%
Other Income 590 446 32.5% 537 10.0% 2,046 1,722 18.9%
% of total income 37.7% 38.2% 37.1% 37.0% 38.8%
Total Income 1,568 1,165 34.5% 1,446 8.4% 5,534 4,438 24.7%
Payment to employees 262 204 28.5% 254 3.1% 980 784 24.9%
Other operating expenses 368 281 31.1% 329 11.9% 1,305 965 35.2%
Total operating expenses 630 485 30.0% 583 8.0% 2,285 1,750 30.6%
Cost to income ratio 40.2% 41.6% 40.3%
Profit before provisioning 938 680 37.8% 863 8.7% 3,250 2,688 20.9%
Provisions 126 72 74.8% 70 80.9% 339 362 (6.1%)
Profit before tax 811 608 33.4% 793 2.3% 2,910 2,326 25.1%
Tax 260 178 46.2% 253 3.0% 905 709 27.7%
Profit after tax 551 430 28.1% 540 2.0% 2,005 1,618 24.0%
EPS 13.2 11.9 10.6% 13.0 1.6% 48.0 44.9 7.0%
Gross NPA 0.41% 0.31% 0.42% 0.41% 0.31%
Net NPA 0.12% 0.05% 0.10% 0.12% 0.05%
Prov Coverage Ratio 72.0% 85.1% 76.8% 72.0% 85.1%
Capital Adequacy Ratio 15.6% 14.4% 15.5% 15.6% 14.4%

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Yes Bank Ltd
QQ44FFYY1155RReessuullttUUppddaattee––2233AApprriill22001155
Source: Company data, Nirmal Bang Research
Source: Company data, Nirmal Bang Research
Source: Company data, Nirmal Bang Research
3.0% 3.0%
3.2% 3.2% 3.2%
2.9%
3.0%
3.1%
3.2%
3.3%
Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15
NetInterestMargins
22.0% 22.3% 22.5% 22.6% 23.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15
CASA %
64.7%
35.3%
Customer asset break up
Corporate and
Institutional
Branch Banking
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
1,00,000
Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15
Advances and Deposits
Advances Deposits
38.2%
36.3%
37.1% 37.1%
37.7%
35.0%
36.0%
37.0%
38.0%
39.0%
0
200
400
600
800
Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15
Rs.inCrs
Break up of non interest income
Transaction Banking Financial Advisory Financial Markets
Retail and others % of total income
41.6%
45.0%
40.0% 40.3% 40.2%
30.0%
35.0%
40.0%
45.0%
50.0%
Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15
Costtoincome ratio

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Yes Bank Ltd
QQ44FFYY1155RReessuullttUUppddaattee––2233AApprriill22001155
Source: Company data, Nirmal Bang Research
Source: Company data, Nirmal Bang Research
85.1%
78.4%
75.8%
76.8%
72.0%
65.0%
70.0%
75.0%
80.0%
85.0%
90.0%
Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15
Provision coverage ratio
0.31% 0.33%
0.36%
0.42% 0.41%
0.05% 0.07% 0.09% 0.10% 0.12%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0.45%
Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15
Movementof NPA
GrossNPA NetNPA
0
200
400
600
800
1000
1200
P/E-Forward
Price 3x 6x 9x 12x 15x
0
200
400
600
800
1000
1200
1400
P/BV-Forward
Price 1x 1.5x 2x 2.5x 3x

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Yes Bank Ltd
QQ44FFYY1155RReessuullttUUppddaattee––2233AApprriill22001155
Financials
Profitability (Rs. Crs) FY13 FY14 FY15 FY16E FY17E Balance Sheet (Rs. Crs) FY13 FY14 FY15 FY16E FY17E
Interest earned 8,294 9,981 11,572 14,068 16,642 Equity Share Capital 359 361 418 418 418
Interest expended 6,075 7,265 8,084 9,742 11,465 Reserves and Surplus 5,449 6,761 11,262 13,303 15,827
Net interest income 2,219 2,716 3,488 4,326 5,177 Net worth 5,808 7,122 11,680 13,721 16,245
Non interest income 1,257 1,722 2,046 2,463 2,898 Deposits 66,956 74,192 91,176 1,11,021 1,34,314
Total income 3,476 4,438 5,534 6,789 8,075 (of which CASA) 12,688 16,345 21,079 26,756 32,907
Operating expenses 1,335 1,750 2,285 2,788 3,287 Borrowings 20,922 21,314 26,220 29,319 31,894
Staff costs 656 784 980 1,170 1,216 Other liab and prov 5,419 6,388 7,094 7,733 8,274
Other Op Exp 679 965 1,305 1,618 2,071 Total liabilities 93,296 1,01,894 1,24,490 1,48,073 1,74,482
Operating profit 2,142 2,688 3,250 4,001 4,788 Total liab and equity 99,104 1,09,016 1,36,170 1,61,793 1,90,727
Provisions 216 362 339 384 412 Cash and bank bal 4,066 5,892 7,557 8,611 9,793
Profit before tax 1,926 2,326 2,910 3,616 4,377 Investments 42,976 40,950 46,605 48,655 52,398
Taxes 625 709 905 1,087 1,315 Advances 47,000 55,633 75,550 96,100 1,17,580
Net profit 1,301 1,618 2,005 2,530 3,061 Fixed assets 230 293 319 447 581
Quarterly (Rs. Crs) Mar.14 June.14 Sep.14 Dec.14 Mar.15 Other assets 4,833 6,247 6,139 7,981 10,375
Net interest income 720 745 856 909 977 Total assets 99,104 1,09,016 1,36,170 1,61,793 1,90,727
Non interest income 446 426 506 537 590 Key Ratios FY13 FY14 FY15 FY16E FY17E
Total income 1,165 1,171 1,362 1,446 1,568 Yield Ratios
Operating expenses 485 527 545 583 630 Avg Yield on Assets 10.7% 10.7% 10.6% 10.5% 10.5%
Operating profit 680 644 817 863 938 Yield on Advances 12.7% 12.7% 12.2% 12.1% 12.0%
Provisions 72 24 120 70 126 Yield on Investments 8.1% 8.1% 8.0% 7.9% 7.8%
Profit before tax 608 621 698 793 811 Cost of Int Bearing Liab 8.0% 7.9% 7.7% 7.6% 7.6%
Taxes 178 181 215 253 260 Cost of Deposits 7.9% 7.7% 7.3% 7.3% 7.2%
Net profit 430 440 483 540 551 Net Interest Spread 2.6% 2.8% 2.9% 3.0% 2.9%
Earnings per share 11.7 10.6 11.6 13.0 13.2 NIM 2.9% 2.9% 3.2% 3.2% 3.3%
Profitability Ratios FY13 FY14 FY15 FY16E FY17E Balance Sheet Ratios
Cost / Income Ratio 38.4% 39.4% 41.3% 41.1% 40.7% Gross NPA 0.20% 0.31% 0.41% 0.50% 0.53%
Net profit margin 37.4% 36.5% 36.2% 37.3% 37.9% Net NPA 0.01% 0.05% 0.12% 0.11% 0.11%
RONW 24.8% 25.0% 21.3% 19.9% 20.4% Return on Assets 1.5% 1.6% 1.6% 1.7% 1.7%
Growth Ratios FY13 FY14 FY15 FY16E FY17E CASA 18.9% 22.0% 23.1% 24.1% 24.5%
Advances Growth 23.7% 18.4% 35.8% 27.2% 22.4% Loan-deposit ratio 70.2% 75.0% 82.9% 86.6% 87.5%
Deposit Growth 36.2% 10.8% 22.9% 21.8% 21.0% CAR 18.3% 14.4% 15.6% 14.9% 14.4%
NII Growth 37.3% 22.4% 28.4% 24.0% 19.7% Provision cov ratio 92.6% 85.1% 77.0% 78.0% 80.0%
PAT Growth 33.1% 24.4% 24.0% 26.1% 21.0%
Pre prov profit growth 39.1% 25.5% 20.9% 23.1% 19.7% Per Share Data FY13 FY14 FY15 FY16E FY17E
Non int income growth 46.7% 36.9% 18.9% 20.4% 17.7% EPS 36.46 44.86 48.01 60.55 73.29
Valuation Ratios FY13 FY14 FY15 FY16E FY17E BVPS 161.9 197.5 279.6 328.5 388.9
P/BV 4.92 4.03 2.85 2.42 2.05 Adjusted BVPS 161.7 196.8 277.5 325.9 385.9
P/ABV 4.92 4.05 2.87 2.44 2.06 Dividend Per Share 6.00 8.00 9.00 10.00 11.00
P/E 21.83 17.74 16.58 13.15 10.86 Dividend yield 0.8% 1.0% 1.1% 1.3% 1.4%
Source: Company data, Nirmal Bang Research

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Yes Bank Ltd
QQ44FFYY1155RReessuullttUUppddaattee––2233AApprriill22001155
NOTES
Disclaimer:
Nirmal Bang Securities Private Limited (hereinafter referred to as “NBSPL ”)is a registered Member of National Stock Exchange of India Limited,
Bombay Stock Exchange Limited and MCX stock Exchange Limited. NBSPL is in the process of making an application with SEBI for registering as
a Research Entity in terms of SEBI (Research Analyst) Regulations, 2014. NBSPL or its associates including its relatives/analyst do not hold any
financial interest/beneficial ownership of more than 1% in the company covered by Analyst (in case any financial interest is held kindly disclose)
NBSPL or its associates/analyst has not received any compensation from the company covered by Analyst during the past twelve months. NBSPL
/analyst has not served as an officer, director or employee of company covered by Analyst and has not been engaged in market making activity of
the company covered by Analyst. The views expressed are based solely on information available publicly and believed to be true. Investors are
advised to independently evaluate the market conditions/risks involved before making any investment decision.This document, at best, represents
Analyst opinion and is meant for general information only. NBSPL, its directors, officers or employees shall not in any way be responsible for the
contents stated herein. NBSPL expressly disclaims any and all liabilities that may arise from information, errors or omissions in this connection.
This document is not to be considered as an offer to sell or a solicitation to buy any securities
Nirmal Bang Research (Division of Nirmal Bang Securities Pvt. Ltd.)
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Opp. Peninsula Corporate Park
Off. Ganpatrao Kadam Marg
Lower Parel (W), Mumbai-400013
Board No. : 91 22 3926 8000/8001
Fax. : 022 3926 8010