Analyst Meet / AGM     24-Apr-23
Conference Call
Yes bank
Expects credit cost below 0.5%, cost to asset steady at 2.6% and loan growth at 15-20% for FY2024
Yes Bank conducted a concall on 24 April 2023 to discuss the financial results for the quarter ended March 2023 and prospects of the bank. Prashant Kumar, MD&CEO of the bank addressed the call:
The bank has made a strategic shift toward a granular franchise. The bank has retailed asset of Rs 90000 crore which forms 45% of the total assets. The retail liabilities of the bank stand at Rs 115000 crore which forms 53% of the total liabilities.
The balance sheet of the bank has strengthened as all the legacy asset quality issues have been addressed through a combination of recovery, resolution, upgrade and transfer to Asset Reconstruction Company.
The bank does not expect any impact of aging related provisions during FY2024 to FY2026.
The bank has a comfortable liquidity and capital position
The bank has well protected it''s a core operating profit which stands at 0.9 to 1% of assets, driven by productivity and efficiency gains.
The bank has all key levers in place to grow its profitability ahead. The bank is well geared to grow scale and profitability.
The focus is on higher inflow of a current account and granularity of saving deposit supported by expansion of distribution.
The bank would focus on RIDF investment reduction with enhanced compliance of PSL norms through inorganic as well as organic growth.
Net interest margin of the bank has improved 30 bps to 2.6% in FY2023 and 2.8% in Q4FY2023.
The bank is witnessing healthy traction in the core fee come given by retail asset segment.
Net advances of the bank have increased 12.3% end March 2023. The bank has touched new sanctions and disbursement of Rs 1 lakh crore in FY2023 of which retail sanction and disbursements were at Rs 50000 crore and SME at Rs 25000 crore.
The operating expenses of the bank have increased 26.5% driven by IT spend and other expenses. The cost income ratio was a flat in FY2023.
The bank is acquiring 1.3 lakh CASA customers per month.
The bank has exhibited 60 bps reductions during Q4FY2023 in net assets and carrying value of securities receipts to 2.4% end March 2023.
Recovery is an upgradations were strong at a Rs 6120 crore in FY2023 above guidance of Rs 5000 crore.
The bank has added 83 new branches and more than 3000 employees in FY2023.
The bank has started to witness recoveries in the securities receipt book with recoveries of Rs 1100 crore in Q4FY 2023. The bank expects the aging related credit cost for NPAs and security receipt book at 80 bps in FY 2024 and 100 bps in FY2025. However, the bank expect recoveries and upgrades to take care of credit cost so the net credit cost would be Nil for aging related provision.
The overall credit cost is expected to be below 50 bps in FY 2024
The bank has witnessed an increase in overdue loans in up to 30 days bucket by Rs 700 crore which is offset by decline in 61-90 bucket during Q4FY2023.
The bank is targeting the advances growth of 15 to 20% and deposit growth of 20% for FY2024 on average basis.
The RoA was low at 0.2% in FY2023 against the guidance of 0.4-0.5% on account of higher provisioning and delays in recoveries of some the assets. However the bank is confident of achieving the RoA of 0.4 - 0.5% on conservative basis in FY2024
The credit cost would be best in class in next 3-4 years.
The bank expects cost to asset ratio to remain study at 2.6% for next 2 years on account up investment in IT and distribution network.
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