Yes Bank

The Directors have pleasure in presenting the Fourth Annual Report of
 your Bank together with the audited Balance Sheet, Profit & Loss
 Account and the report on business and operations of the Bank for the
 year ended March 31,2008.
 
 Financial Performance                                   Rs. in million
 Particulars                         April 1,2007 to   April 1,2006  to
                                     March 31,2008     March 31,2007
 
 
 Deposits                               132,73           282,204
 Borrowings                              9,862             8,673
 Advances                               94,303            62,897
 Total Assets/Liabilities              169,824           111,034
 Net Interest Income                     3,367             1,713
 Non Interest Income                     3,545             1,946
 Operating Profit                        3,500             1,724
 Provisions and Contingencies              436               287
 Profit before Tax                       3,064             1,437
 Provision for Taxes                     1,064               493
 Net Profit                              2,000               944
 Add: Surplus/(Deficit) brought forward 
 from last period                        1,053               377
 Amount available for appropriation      3,053             1,321
 Appropriations
 Statutory Reserve under Section 17 of 
 the Banking                               500               236
 Regulation Act, 1949
 Capital Reserve                           102                32
 Surplus carried to Balance Sheet        2,451             1,053
 Key Performance Indicators
 Net Interest Margin                      2.74%             2.79%
 Return on Annual Average Assets          1.42%             1.24%
 Return on Equity                        19.00%            13.88%
 Cost to Income Ratio                    49.36%            52.88%
 Non Interest Income to Net Revenues     51.29%            53.17%
 
 Your Bank posted net revenues (net interest income and other income) of
 Rs. 6,912 million and net profit of Rs. 2,000 million for the Financial
 Year 2007-08. Net revenues and net profit for the Financial Year
 2006-07 was Rs. 3,659 million and Rs. 944 million respectively.
 Appropriations from the net profit have been effected as per the table
 on the earlier page.  Please refer to the section FINANCIAL AND
 OPERATING PERFORMANCE in the Management Discussion and Analysis for
 detailed analysis of financial data.
 
 Dividend
 
 Your Bank is in the initial stages of growth and needs to retain
 capital to meet the Banks investment requirements and maintain a
 healthy Capital Adequacy Ratio to support future growth and capital
 adequacy requirements. Hence, your Directors do not recommend any
 dividend for the Financial Year ended March 31, 2008.
 
 Capital Raising & Capital Adequacy Ratio (CAR)
 
 During the Financial Year 2007-08, your Bank completed infusion of
 equity capital of Rs. 3,307.5 million comprising of private placement
 of 14.7 million equity shares to Orient Global Tamannd Fund Pte Ltd,
 Singapore at Rs. 225 per share.  The paid up capital of your Bank stood
 at Rs. 2,957.89 million as at March 31, 2008 as compared to Rs. 2,800
 million as at March 31, 2007, post private placement and exercise of
 employee stock options.
 
 Your Bank is well capitalised with a Capital Adequacy Ratio of 13.6% as
 at March 31, 2008 as against the stipulated minimum of 10% prescribed
 by the Reserve Bank of India.  Of this, Tier I Capital accounted for
 8.5% as against 8.2% as at March 31, 2007 and Tier II capital is at
 5.1% as compared to 5.4% as at March 31, 2007.
 
 Your Bank also raised a sum of Rs. 2,489 million by way of Tier II
 capital during the Financial Year 2007-08. Of this, Rs. 549 million was
 issued in the form of subordinated debt and Rs. 1,940 million was
 issued by way of Upper Tier II instruments. Your Bank has utilised the
 proceeds of the issue of equity and Tier II capital to augment the long
 term capital resources and to enhance the Capital Adequacy Ratio for
 successfully implementing its growth plans.
 
 Employees Stock Option Scheme
 
 Your Bank has instituted Stock Option Plans to reward and retain
 employees and to enable them to participate in your Banks future
 growth and financial success. The Stock Option Schemes also enable the
 Bank to hire the best talent for its senior management and key
 positions. The Bank has four Employee Stock Option Schemes viz. Joining
 Stock Option Plan I (JSOP I), Joining Employee Stock Option Plan II
 (jESOP II).  Joining Employee Stock Option Plan III (|ESOP III) and YBL
 ESOP (consisting of two sub schemes).
 
 The Employee Stock Option Plans are administered by the Board
 Remuneration Committee of the Bank.
 
 The details of the grants under JSOP I, JESOP II, JESOP III and YBL
 ESOP respectively are as follows:
 
                                 JSOP I            JSOP II   
 
 Total no. of                  10,000,000        5,000,000
 Options granted
 The Pricing Formula           At par            The dosing price on
                                                 the stock exchange
                                                 with greater trading
                                                 volumes on one day
                                                 prior to the date
                                                 of grant.
 Options Vested                 3,094,750        Nil
 Options Exercised              1,089,750        Nil
 
 JSOP III                  JSOP IV               JSOP  V
 
 5,000,000                4,277,500              3,355,000
 The closing price        The closing price      The closing price
 on the stock             on the stock           on the stock
 exchange with            exchange with          exchange with
 greater trading          greater trading        greater trading
 volumes on one           volumes on one         volumes on one
 day prior to the         day prior to the       day prior to the
 date of grant.           date of grant.         date of grant.
 Nil                      Nil                    Nil
 Nil                      Nil                    Nil
 
 
 The total no. of shares
 arising as a result of        1,089,750         Nil
 exercise of Option
 Options lapsed /
 Forfeited                       544,000         362,500
 (During FY 07-08)
 Variation of terms      There is no variation   There is no variation
 of Options              in the terms of the     in the terms of the
                         Options during the      Options during the
                         Financial Year ended    Financial Year ended
                         March 31, 2008.         March 31, 2008.
 Money realized by       10,897,500              Nil
 exercise of Options
 Total no. of Options    5,303,750               2,767,500
 in force
 Total no. of Options
 granted to
 (during FY 07-08):
 Senior Management
 Personnel (SMP)
 a.   Total no. of 
 Options                 Nil                    Nil
 granted to SMP  
 b.   SMP receiving 
 grant
 in any one year
 amounting to 5% or
 more of Options
 granted during
 that year
 Any other employee
 who received a grant  
 in any one year of     Nil                    Nil
 Options, amounting
 to 5% or more of
 options granted
 during that year
 Identified employees
 who are granted
 Options, during any
 one year equal to
 or exceeding I% of     Nil                   Nil
 the issued capital
 (excluding outstanding
 warrants and conversions
 of the Company at               
 the time of grant
 Diluted Earnings
 Per Share (EPS) of the
 Bank after considering
 the effect of potential                      Rs. 6.75
 equity shares on
 account of exercise              
 of Options                            
 
 Nil                     Nil                    Nil
 480,000                 626,000                195,000
 
 There is no variation   There is no variation  There is no variation
 in the terms of the     in the terms of the    in the terms of the
 Options during the      Options during the     Options during the
 Financial Year ended    Financial Year ended   Financial Year ended
 March 3 1, 2008.        March 31, 2008.        March 3 1, 2008.
 Nil                     Nil                    Nil
 4,225,000               3,651,500              3,160,000
 Nil                     510,000                675,000
 Nil                     Aditya Sanghi
 200,000
                         Ajay Mahajan 
 200,000
 Nil                     Nil                   Madhusudan Somani 
 200,000
 Nil                     Nil                   Nil
 
 Impact of the difference 
 between the Intrinsic 
 Had the Bank adopted
 Fair Value method for 
 pricing and accounting 
 of Options instead of
 Intrinsic Value method, 
 Value of the Options 
 compensation cost would
 have been higher by 
 Rs. 2,38,769 thousand; 
 the net profit after tax
 would have been and the 
 Fair Value of lower by 
 Rs. 1,57,612 thousand;
 the basic EPS would have 
 been Rs. 6.47 per share 
 (instead of Rs. 7.02
 per share) the Options on 
 Profits and the diluted 
 EPS would have been
 Rs. 6.22 per share (instead 
 of Rs. 6.75 per share), 
 and on EPS Weighted
 average
                         10.00                 89.44
 exercise prices
 Weighted average fair
 values of the Options    5.29                 43.34
 99.89                  189.00                191.57
 48.23                   95.95                 92.75
 
 The Securities and Exchange Board of India (SEBI) has prescribed two
 methods to accounts for stock grants; (i) the Intrinsic Value method;
 (ii) The Fair Value method. The Bank adopts the Intrinsic Value method
 to account for the stock Options it grants to the employees. The Bank
 also calculates the Fair Value of Options at the time of grant, using
 Black-Scholes pricing model with the following assumptions:
 
 i)   Risk free interest rate      6.54%    6.81% 6.73%    7.45%
 
 ii)  Expected life                 6.5 yrs 
                                 to 7.5 yrs 6.5 yrs to       7.5 yrs
 
 iii) Expected volatility         50.58%    35.97%          49.92%
 
 iv) Expected dividends            1.44%     1.13%           1.23%
 
 v) The price of the
 underlying share in             Not Listed               Rs.89.44
 market at the time
 of Option grant            
 
 Directors
 
 Mr. Bharat Patel and Mr. Wouter Kolff shall retire at the ensuing
 Annual General Meeting and being eligible offer themselves for
 re-appointment.
 
 Mr. Kashi Memani, Independent Director resigned from the Board w.e.f
 December 11, 2007. Your Directors place on record their appreciation of
 the valuable contribution made by him to the Banks growth and
 development.  Mr. H Srikrishnan, Executive Director resigned from the
 Bank in April 2008, and his resignation was accepted w.e.f. April 25,
 2008.
 
 The Board at its meeting held on April 29, 2008 appointed Ms. Radha
 Singh and Mr. Ajay Vohra as additional Director(s) of the Bank. They
 hold office up to the date of the forthcoming Annual General Meeting
 but are eligible for appointment.
 
 Corporate Governance
 
 Your Bank is committed to achieving the highest standards of Corporate
 Governance. Accordingly, your Board functions as trustees of the
 shareholders and seeks to ensure the long term economic value for its
 shareholders while balancing the interest of the stakeholders.
 
 A separate section on Corporate Governances standards followed by your
 Bank as stipulated under Clause 49 of the Listing Agreement with the
 Stock Exchanges is enclosed as an Annexure to this report.
 
 Auditors
 
 M/s. S. R. Batliboi & Co., Chartered Accountants will retire at the
 forthcoming Annual General Meeting. They have been Statutory Auditors
 of the Bank for the last four years, which is the maximum term of
 appointment of Auditors permitted by Reserve Bank of India. As
 recommended by Audit & Compliance Committee, the Board has proposed the
 appointment of M/s B S R & Co, Chartered Accountants as Statutory
 Auditors for the Financial Year 2008-09. Their appointment is subject
 to approval by the Reserve Bank of India. Members arc requested to
 consider their appointment on a remuneration to be decided by the Board
 or Committee thereof for the ensuing Financial Year i.e. 2008-09.
 
 Statutory Disclosures
 
 The statement containing particulars of employees as required under
 Section 217 (2A) of the Companies Act, 1956 forms part of this report.
 In terms of Section 2l9(l)(b)(iv) of the Act, the same is open for
 inspection at the Registered Office of your Bank. Copies of this
 statement may be obtained by the members by writing to the Company
 Secretary of your Bank.
 
 The provisions of Section 2l7(l)(e) of the Companies Act, 1956 do not
 apply to your Bank. Your Bank is constantly pursuing its goal of
 technological upgradation in a cost efficient manner for delivering
 quality customer service.
 
 Directors Responsibility Statement
 
 Pursuant to the requirement under Section 217(2AA) of the Companies
 Act, 1956, with respect to Directors Responsibility Statement, it is
 hereby confirmed that:
 
 (i) in the preparation of the accounts for the Financial Year ended
 March 31, 2008 the applicable Accounting Standards have been followed
 along with proper explanation relating to material departures; 
 
 (ii) the Directors have selected such accounting policies and applied
 them consistently and made judgements and estimates that were
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Bank as at March 31, 2008 and of the profit of the
 Bank for the year under review;
 
 (iii) the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Bank and for preventing and detecting fraud and other
 irregularities; and
 
 (iv) the Directors have prepared the annual accounts of the Bank on a
 going concern basis.
 
 Acknowledgement
 
 Your Directors take this opportunity to express their deep and sincere
 gratitude to the customers of the Bank for their confidence and
 patronage as well as to the Reserve Bank of India, Government of India
 and Regulatory Authorities for their co-operation, support and
 guidance. Your Directors would like to express a deep sense of
 appreciation for the commitment shown by the executives in supporting
 the Bank in its endeavour to create the Worlds Best Quality Bank in
 India.  Your Directors would also like to express their gratitude to
 the members for their trust and support.
 
                                        For and on behalf of the Board
 
 Place: Mumbai                                 Ashok Kapur Rana Kapoor
 Date : April 29, 2008  Non-Executive Chairman Managing Director & CEO