Skip to main content

Yes Bank's Q1 FY24 Report: A Closer Look at the Numbers

Yes Bank's Q1 FY24 Report: A Closer Look at the Numbers

Understanding a bank's financial performance can be a daunting task, especially when faced with complex terms and figures. But fear not, we're here to break down Yes Bank's Q1 FY24 report in simple terms, so you can grasp what's been happening with this financial institution.

A Quick Overview

In the first quarter of the financial year 2024 (Q1 FY24), Yes Bank reported a 39 percent increase in its pre-provision profit. 

Sounds impressive, right? Well, it is! This boost came from good growth in fees and gains from trading activities. But there's more to the story. The net profit only grew by 10 percent year-on-year (YoY), and this was primarily because the bank had to set aside more money for provisions.

Growth That Lags Behind

One of the key indicators of a bank's health is its loan growth, which is essentially how much money it's lending out. In the last reported quarter, Yes Bank's loan growth was a bit sluggish, at just over 7 percent YoY. 

To make matters worse, it even declined a bit when compared to the previous quarter. This is below what the overall banking system in India achieved.

The problem seems to be in Yes Bank's corporate lending division, which has been declining. It's gone from 38 percent of the bank's portfolio a year ago to just 25 percent now. Even though Yes Bank has been focusing on lending to retail and small business segments, the interest margin (also known as NIM) remains at around 2.5 percent. In the last quarter, it actually decreased a bit. With the possibility of the bank having to pay more for deposits, this margin could go down further unless they attract more deposits or have fewer loans go bad.

The Challenge of Liability

A crucial part of a bank's success is its ability to gather deposits. These deposits not only help banks lend money but also impact their interest margins. Yes Bank has some work to do in this area. While they did see some growth in deposits in the last quarter, it was mostly term deposits. The low-cost current and savings account (CASA) deposits, which are desirable for banks, actually decreased. This means that Yes Bank is relying more on term deposits, which tend to be costlier.

Asset Quality and Its Challenges

The health of a bank also depends on the quality of its assets, meaning how many loans it has that are likely to not get repaid. Yes Bank did transfer some of its bad loans to an asset reconstruction company (ARC), which improved the numbers a bit. The gross and net non-performing asset (NPA) ratios are now at 2 percent and 1 percent, respectively, with a provision cover of 48 percent. But here's the catch – new loans are still going bad at a relatively high rate, especially in the retail segment.

Profit and Expenses

Yes Bank's cost to income ratio is a measure of how efficiently it operates. In the last quarter, this ratio was quite high at 74 percent, mainly because of increased operating expenses related to people, products, technology, and expanding their network. Unless the bank can significantly increase its earnings, this ratio is unlikely to come down.

The Road to Recovery

Yes Bank's return on assets (RoA) stood at 0.4 percent in Q1, and they aim to reach 1 percent as a medium-term goal. To get there, they need more loans, better interest rates, improved margins, and lower credit costs. It's a tall order, especially when considering the challenges they face.

Valuation and Conclusion

So, what's the verdict? Yes Bank's stock valuation may not be all that attractive when compared to other banks with similar valuations. Many of these other banks are delivering better returns on assets. Yes Bank's path to full recovery is still uncertain, and they have a lot of work to do to get there.

In simple terms, while Yes Bank has made some progress, there are still significant hurdles on its path to success. Its growth in loans, the quality of its assets, and its ability to gather low-cost deposits all need to improve for the bank to truly thrive. So, if you're considering investing in Yes Bank, it might be wise to weigh the risks carefully and be prepared for a potentially long journey to recovery.


Popular posts from this blog

Inspirational Story Of Ferrari - Amazing Adviser

Inspirational  Story Of Ferrari Hello friends, today I'm going to discuss one of the most popular sports car companies in the world - Ferrari. Today, each sports car lover dreams to get a Ferrari. It keeps gaining popularity till today. This company was founded by Enzo Ferrari. So let's get to know the success story of Ferrari. Also Read, Success Story Of Amul Success Story of Dominos Pizza The story starts with 18 Feb 1898 when Enzo Ferrari was born in Italy. Enzo was fond of cars right from his childhood. At 10 yrs of age, he went to see a car race with his father.  At that point in time, he decided that he would become a racing driver. After that, he attended many car races. After completing his graduation from Modena College, he worked as a teacher.  But after a few months, he had to join the Italian army for the first World War. In 1916, he suffered a lot with emotions as well as the economy when his brother and father died. After returning from World War, he began to find

Success Story Of Colgate, One Of The Bestselling Toothpaste Brand

Success Story Of Colgate, One Of The Bestselling Toothpaste Brand "It cleans your breath while it cleans your teeth", can you guess whose slogan is this.  If you have guessed correct then today I'm going to tell you the success story of one of the best selling toothpaste brands of India i. e. Colgate.  It's popularity can be measured by thousands of situations where the term toothpaste is replaced by Colgate in India.  Do you know, this brand came into being almost 210 years ago, introduced by Williams Colgate .  And initially, this company used to produce soaps, not toothpaste that too in jars and not tubes.  So now, let's get back to the beginning of the story.  Also Read Success Story Of Haldiram Bujhia Success Story Of Amul How Maggie Became Successful? The founder of Colgate, Willam Colgate was born on 25 Jan 1783 in England. His father was a farmer.  But later, they shifted to Maryland in the US where his father along with a friend began to make candles

Inspirational Story Of BMW - Amazing Adviser

  The wonder of science has shown many miracles in today's age in the form of spectacular vehicles.  Today I will discuss about a German company that specializes in designing cars, bikes and engines - BMW. It came into being before 101 years and is known for its expensive and luxury cars like Rolls Royce and Mini.  But do you know that BMW was in the list of those companies which were restricted to produce any kind of vehicles during the time of World War?  And in that period, this company started making bicycles and kitchen utensils.  Now let's go to the beginning of the story.  Also Read Success Story Of Ambassador Car   Success Story Of Jaguar   Success Story Of UBER     The founder of BMW was Karl Friedrich Rapp. He was born on 24 September 1882 in Germany.  He became a mechanical engineer and opened his start up named Karl Rapp Motorenwerke where mostly aircrafts and their engines were made.  When the first world war started, there was a huge demand of aero engines.  Thus,