Here's what to expect from Yes Bank Q1 earnings

Moneycontrol Bureau

Private sector lender YES Bank's first quarter (April-June) net profit is likely to grow 32 percent year-on-year to Rs 382 crore. Net interest income (NII) or the difference between interest earned and paid out, may increase by 39 percent y-o-y to Rs 658 crore from Rs 472 crore a year ago, according to an average poll estimate by CNBC TV18.

"With its increased focus on retail, we need to see how much deposits Yes Bank manages to mobilise," Dinesh Shukla, a banking analyst from Sharekhan Brokerage told moneycontrol.com.

"We are a bit apprehensive of its asset quality. In recent time, some major private sector lenders have reported deterioration in their credit quality. Any ugly surprise will dent its net interest margin due to higher provisions.  Yes Bank should be able to expand its loans better-than-industry average."

The bank of late started giving more focus on retail business. Almost a year back, the bank hired Pralay Mondal, who was earlier with HDFC Bank. Recently, he has got a seat in the board. The astute banker is known for his retail skills.

However, the lender may incur higher overhead expenditure due to retail expansions.

The bank may expand its loans around 25 percent y-o-y while deposits are expected to grow by 35 percent y-o-y. However, the growth will be on a lower base.

The bank's loans expanded nearly 24 percent y-o-y to about Rs 47,000 crore. Including the credit substitute - a form of indirect credit wherein the bank underwrites bond issues of rated companies, the total book rose 31 percent to about Rs 60,300 crore.

Analysts feel the net interest margin should move in a range of of +/-5-7 basis points in June quarter as against 3 percent reported in the previous quarter.

Since six months, Yes Bank shares dropped 15 percent as against a fall of 11 percent in the Bank Nifty - the broader index for banking stocks.

saikat.das@network18online.com