YES Bank Shares Falls Over 4% After Q2 Results

After the release of Yes Bank's September quarter results, the share price declined 4% on Monday. It opened at ₹17.40 and dropped to an intraday low of ₹16.75. Yes Bank declared its Q2FY24 results on October 21 and reported a net profit of ₹225 crores, a 47.4% year-on-year increase. However, it saw a 34.3% dip compared to the previous quarter, the bank had reported a net profit of ₹343 crores in Q1FY24. Despite the challenging economic conditions, the bank managed to maintain a stable Current Account Savings Account (CASA) ratio of 29.4% during the quarter.

Yes Bank, the private sector lender, reported a 17.2% increase in deposits compared to the previous year, with a 6.8% increase in the last quarter, reaching a total of ₹2.34 lakh crore. Additionally, the bank's advances saw a growth of 9.5% compared to the previous year and 5.2% in the last quarter, amounting to ₹2.20 lakh crore. These details were disclosed in a filing with the Bombay Stock Exchange (BSE) dated October 3.

In the September quarter, Yes Bank saw a positive change in the quality of its assets. The ratio of gross non-performing assets dropped to 2%, and the net non-performing assets ratio improved to 0.9%. Additionally, Yes Bank's Provision Coverage Ratio (PCR) for Q2FY24 increased to 56.4% from 48.4% in the first quarter of the current financial year.

Income and Margin Metrics

Yes Bank's Net Interest Income (NII) for Q2FY24 was ₹1,925 crore, but it decreased a 3.3% compared to Q2FY23. The Net Interest Margin (NIM) in Q2FY24 was 2.3%, which is down by nearly 30 basis points (bps) from the previous year and 20 bps from the previous quarter.

Additionally, non-interest income in Q2FY24 increased to ₹1,210 crore, showing a 38.4% growth year-on-year and a 6% increase from the previous quarter.

CEO's Perspective

Prashant Kumar, the Managing Director and CEO of Yes Bank emphasized that the bank's Q2 FY24 performance highlights the strength of its core franchise, developed through strategic interventions in recent years. Despite challenging economic conditions, Yes Bank managed to expand both its operating profitability and net profitability year-on-year. The balance sheet was also fortified from an asset quality perspective.

Stock Performance

The share price of Yes Bank has declined by over 5% in the past month. However, at slightly more extended time frames, YES Bank has given positive returns of more than 5% in the past six months and a one-year time frame. On a more comprehensive horizon, Yes Bank's stock ultimately erodes investor wealth over five years.

Final Words

Yes, Bank Q2 2023 results represent that the bank is improving its asset quality and maintaining profitability despite the challenges posed by the rising cost of funding. While the initial market reaction was adverse, some experts view the dip in share prices as a potential buying opportunity. Yes Bank's fundamentals have been steadily improving since the State Bank of India took over its management during a crisis, and these results suggest that the bank is on a positive trajectory for the future.