Yes Bank share price falls after Q2 earnings; check what analysts say

Yes Bank reported its Q2 earnings last week and the earnings were below expectations. The Yes Bank shares have seen selling pressure both on Muhurat trading and then on Tuesday morning. The stock has fallen by 3% since it reported earnings. Despite the recent fall, the share price has given over 10% returns in 2022. 

Yes Bank Q2 earnings: Highlights

Yes Bank Q2 results: Key highlights

Profit beats estimates: Yes Bank reported a net profit of Rs 152.80 crore in Q2FY23, down 32.2% from the year-ago period, below street expectations. Analysts had earlier anticipated a profit of about Rs 300 crore. Sequentially, the profit was down from Rs 310.63 crore.

Net interest income rises: A bank’s main business is to borrow money from various sources and lend that money at a higher rate. The income the bank generates from this difference is known as net interest income. Net interest income for Yes Bank grew to Rs 1,991 crore, up 31.7% year-on-year (YoY). Net interest margin increased 20 bps on-quarter to 2.6%.

Non-interest income (other income) for Q2FY23 stood at Rs 920 crore, up by 18.2% due to higher income from forex, debt capital markets, and securities segments.

Asset quality improves: The bank’s Gross NPA ratio declined 12.9% compared with 13.4% in the previous quarter, and 15% in Q2FY22. Net NPA ratio reduced 190 bps year on year to 3.6% and 60 bps sequentially.

Provisions: Provisions for bad loans and contingencies were raised to Rs 582.81 crore for Q2FY23 from Rs 377.37 crore kept aside for Q2FY22.

Deposits: The Bank’s net advances at the end of the September quarter stood at Rs 1.92 lakh crore, a growth of around 3.2% on quarter and 11.3% year on year. Retail & SME: Mid Corp.: Corporate Mix improved to 54:12:34 from 51:11:38 in Q1FY23. The deposits increased by 13.2% year-on-year to Rs 2.00 lakh crore, with total balance sheet growth at 16% year on year.

Bank’s CASA (current and savings account) deposits now comprise 31% of the total deposits of the bank, up 160 bps YoY and 20 bps sequentially. CASA capital is the cheapest source of capital for every bank. CASA continues to grow at nearly 2x the rate of overall deposits growth.

Other Key highlights: Return on Assets for Q2FY23 was 0.2%, while Return on Equity was 1.8% (both down sequentially). Cost to Income came at 72.8% in Q2FY23 compared with 77.6% in Q1FY23 and 70.4% in Q2FY22. First Indian Bank to publish its 10th Sustainability Report marking the Bank’s decade-long leadership in ESG performance and sustainability reporting.

Yes Bank: Brokerage radar

ICICI Securities: has maintained a HOLD rating on Yes Bank shares with an unchanged target price of Rs 15.7 per share. The firm said that the miss in earnings was primarily due to higher than anticipated credit cost at 1.1%, accelerated by aging-related provision and a step up in provision on securities receipts. The brokerage sees a turnaround in relevant operating metrics and improved confidence in the stability of the franchise.

Nirmal Bang: The firm has maintained a SELL rating on the stock with a target price of Rs 14.8 per share. On the operational front, the numbers were stable, with an improvement in margin and healthy growth in non-interest income. Operating expenses remained elevated on the back of branch expansion and technology investments.