Bank Results season (India Earnings) : Yes Bank starts back from 390 levels despite overnight straits

Yes Bank covered a lot of ground after publishing results yesterday, as the Net Interest Income jumped 2 in 5 on year or net profits increased more than 10% sequentially on INR 0.94 Bln in Investment gains on bonds /debt . The NII of INR 65.9 Bln was sufficiently larger by our benchmarks as the bank remains one of the few posting robust gains in Fee Income and advisory income including retail charges as at bigger brother HDFC Bank, the lines have gone relatively stale on such income in the Indian scenario.

Other Income was INR 44.2 Bln looking to equal contributions from NII going ahead as is the wont of this income stream in robust bank models. While private banks set quite a standard for robust corporate governance without due transparency in such old habits in Indian Banking a s a consolidated other income figure unexplained, the reforms in banking would still have covered more ground than it is internationally. the higher interest savings led CASA increase to 20% at the bank is still miles away from reaching an entrenched player status but that is just a n indicator of this bank’s potential to grow faster and stronger than the ICICI Banks and the HDFC Banks.

Retail assets remain a priority  at the bank with total book still ahead of other “midcaps” as Kotak and indusind dependent on corporate treasuries ( variously wholesale deposits/short funding linked to the usurius 10% = call rates pushed by RBI’s interim policy) with assets of INR 612 Bln

The yields, cost of funds a dynamic provision coverage shared by the bank(click here) continue to reflect the continuing profitability of the bank’s model and its relative closeness to NBFC models in vogue, currently trying to reprocess themselves as banks but the existing players will settle up much higher in any status ranking of the candidates yet remaining a respectful outsider in loan syndicates and loan melas

 

Bank Results season: What’s so great about HDFC Bank(Q3 2012)?

Headline results at Gross NPAs up to INR 22.02 bln from below 20 bln last quarter and a NIM of 4.1% with Gross NPAs down to 1.03% vs 1.11%

December 2011 gross income topline has come to INR 86.22 bln or 7.5% up on quarter. September 2011 had grown income to $1.6 bln by Indian GAAP or nearly INR 79.5 bln up 37% from September 2010 despite the bad credit conditions that actually meant INR 30 bln in NII and INR 12 bln in Other income ( Fee  and non interest income) at 4.1%.

October saw a marginal pullback in credit figures as well NII growth should be closer to 20% as the bank has grown assets in the new quarter and NIM is good at 4.1% As I expected, Cost income ratio has come down from 48.7% with Loan income at two thirds, of the total topline, branch costs should be controlled to lower 40% levels

Net interest income at INR 31.16 bln and Other income at INR 14.20 bln are also thus higher on September but NII has a yoy growth of 12% down from 16% in September  YOY growth in total income (Indian GAAP) and profits is nearly 35%

Net Profits increased to INR 14.29 bln up 19% on quarter reflecting the seasonal growth in October, year on year growth close to 40% while growing Provision Coverage Ratio to 80% against the required 56% improving Cost Income to 46.7% despite 420 new branches from last year December and 340 were new cities in the bank’s distribution network. ATMs grew from 5000 to 7110.

Deposit growth of 21% on the year despite a CASA of 47.7% and interest rates having plateaued at a peak of around 9.5% and 11% (less than 1 year lending) CASA deposits are now INR 700 bln maintaining the Sept 30 figure of INR 690 bln. Tier I ratio is 11.2% before 3Q profits CASA and other deposits had grown 6.5% and 13% from the June quarter and have not gone down since

Provisions are lower by 50% at INR 3.29 bln Retail is 51% of the book and wholesale 49% with retail loans having grown in the latest quarter at 29% yoy against 15% in wholesale as the bank shuts down ipon its short and medium term lending to reduce risk

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