Private sector lender – Yes Bank has constituted a 100% subsidiary company christened as Yes Securities India Ltd to kick start its brokerage business by August-September, 2013. According to Jaideep Iyer, senior president – financial management, the lender may also acquire any small broking firm for the same.
Private sector lender Yes Bank has constituted a 100% subsidiary company Yes Securities India Ltd to kick start its brokerage business by August-September, 2013. According to Jaideep Iyer, senior president financial management, the lender is also considering the acquisition of a small broking firm. The exercise is seen as a part of building customers base before it finally launches home loan products.
"This is a good situation. We are offering 6-7% rate of interest in savings account and you are getting a demat account from the bank. Now, you will get our brokerage services. This is a 3-in-1 service (in line with HDFC Bank or ICICI Bank). It will be a low cost and web-based model. If we acquire something, we can migrate them into Yes Bank customers," he told moneycontrol.com.
It is learnt that the bank may have already recruited top three executives for the broking arm. It is in talks with two or three small time brokerages. However, nothing concrete has come out yet. moneycontrol.com could not independently identify those brokerage names.
The business planning is still under process. The prime focus will be on retail customers, not institutional ones. However, they may look for margin funding as well. Margin funding is the process wherein an investor parks part of the money needed to buy a stock and the rest is paid by the lender. Typically, brokerages allow margin funding facility to their best customers.
Why brokerage in a gloomy economy?
In general, the brokerage industry is now down in the dumps. What actually prompts Yes Bank to get into this platform is to expand its customer base for the whole gamut of product kitty. For the bank, broking is not going to be a big bang affair. The bank will not set up too many offices for broking business exclusively.
"We will initially use our bank branch network to expand it. It will save our operating costs. We are working out a mechanism wherein brokerage will have to depend on bank's customer base. The standalone brokerage model is extremely difficult," Iyer said.
In the October-December quarter, Yes Bank's net profit shot up 33% to Rs 428 crore on a lower base. Non-interest income rose spurted more than 48% year-on-year to Rs 313 crore.
Yes Bank shares rose more than 19% as against nearly 11% rise in Nifty Bankex, the broader index for banking stocks.
Yes Bank stock price
On October 20, 2014, at 10:01 hrs Yes Bank was quoting at Rs 610.75, up Rs 12.75, or 2.13 percent. The 52-week high of the share was Rs 634.25 and the 52-week low was Rs 292.10.
The company's trailing 12-month (TTM) EPS was at Rs 39.76 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 15.36. The latest book value of the company is Rs 172.28 per share. At current value, the price-to-book value of the company is 3.55.
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