RANA KAPOOR, Founder/Managing Director & CEO

In the last financial year, the Indian economy found itself in the midst of conflicting demands of managing growth and price stability. Regular hikes in monetary policy rates in a bid to harness inflation, elevated global crude oil prices, rising cost of funds, lack of domestic policy traction and a deteriorating global environment, saw GDP growth slipping successively on a quarterly basis through 2011. Additionally, weak macroeconomic fundamentals, led to deterioration in twin deficits – fiscal and trade deficit as the year drew to a close, escalating the bearish sentiment.

The beginning of FY13 was marked by the reversal in RBI's monetary stance, as it cut the benchmark repo rate by 50 bps to 8.0% for the first time in 3 years. The fiscal year is likely to be one of cautious optimism, as nascent ancedotal indicators point towards a marginal recovery but the outlook remains challenging. The revival clearly hinges on the anticipation of the government's ability to achieve fiscal consolidation, revive policy
reforms; and recovery in the global economic environment.

Despite the challenging macroeconomic environment in 2011-2012, it has been an extremely satisfactory year for our Bank, which has truly demonstrated a fine financial performance across all four quarters. The recent savings rate deregulation has been a transformational development and a stratospheric banking reform in the last 20 years, and YES BANK has been a trendsetter in capitalising on this development, by being the first to increase Savings Account rates in consonance with market conditions.

I am pleased to report to you that the 7% savings interest rate offering has witnessed greater penetration in corporate salary accounts, and other savings accounts especially in key metro and urban areas, which is now being cascaded to semi-urban and rural markets as well. I am confident that this deregulation will be a game changer in further galvanising small, medium, as well as large savers who are ready to move out from the lazy banking atmosphere, into a more dynamic, rate-driven and service-driven
competitive environment, like ours.

The Bank's objective in the last two years has been to achieve sustainable growth in Core Liabilities, driven by significant increase in Cash Management, Trade Flows, and maximization of Direct Banking and Cards Management channels. The strategy has also been to focus on building scalability and granularity in our businesses through a robust branch banking model, while further augmenting our high quality human capital.
In just the last 9 months we have enhanced our branch network by over 100 branches, and are adding almost 30 to 40 branches every quarter. We also believe that with the deregulation ofbranches for tier 2 to 6 cities, our Bank should have 900 branches by 2015, ahead of our Version 2.0 Vision and Strategy.

I truly believe that we have achieved this steady growth trajectory across all business segments, thereby further enhancing our unique financial and business model, which emphasises on value addition and superior, consistent and high quality service.

The focus for the current phase of growth is primarily on deposit mobilisation. YES BANK plans to maintain its focus on garnering CASA on the back of our expanding distribution network,focusing on B2B2C alliances and segmental strategies to create increased momentum in granular deposit accretion, with a focusto achieve its long-term goal of building CASA up to 30% of its total deposit base.

I am pleased to apprise you on two key partnerships that have fructified this year. The Bank in association with CARE India, a humanitarian relief and development NGO working in India for more than 60 years, launched India's first Social Deposit Account (SDA). This is an evolution of the regular Fixed Deposit account where customers have the option of donating their interest income to a social cause through CARE India. As
part of our Responsible Banking ethos, I would like to inform you that the Bank for the first time is introducing a
Sustainability Report along the GRI guidelines.

I am also pleased to advise you that the Bank entered into an MoU with the Indian Army to launch the YES-VIJAY Salary Programme. YES BANK has initiated relationships with 35 units/regiments already, and we are in the process of setting up our state-of-the-art world class branches and ATMs in Army Cantonments and regimental centers. Branch expansion continues to be a significant organizational imperative for our Bank's next phase of growth - Version 2.0 that will further propel Retail/SME Banking initiatives.

Towards this, YES BANK launched its second flagship state-of-the-art branch in Kolkata at Dalhousie, inaugurated by the Hon'ble Finance Minister of West Bengal Dr. Amit Mitra. The Hon'ble Chief Minister of Haryana, Shri Bhupinder Singh Hooda launched the Branch Banking Operations in Haryana from YES BANK's flagship Branch at Madhya Marg, Chandigarh.

As part of our knowledge-driven approach, this year, YES BANK has significantly invested in initiatives such as the launch of the YES BANK National CFO Forum across Mumbai and Delhi and the Financial Times-YES BANK International Banking Summit, amongst others. Education and Sports have been two significant focus areas for YES BANK this year. Given our significant focus on University and School Relations Management (YES - USRM), we constantly endeavour to promote various learning and talent management initiatives. This year, YES BANK in association with Rutgers Business School, which is amongst the top 25 leading Business Schools in the world, for the very first time, offered a 5-day MINI-MBA programme for students, employees and other senior business experts. These participants were guided and trained by senior faculty members of the business school. YES BANK this year has been associated with Corporate Masters, Senior Citizens Golf, and International Polo across India. We truly believe in supporting and promoting sporting activities that
showcase our country's abundant and diverse talent.

This year once again, YES BANK has been recognized amongst the Top and the Fastest Growing Banks' in various Indian Banking League Tables by prestigious media houses and Globalt Advisory Firms. The Bank has also been ranked 557 among FT– 1000 Banks, up 333 places (second highest jump for any Bankh worldwide) from 890 rank last year.

YES BANK was awarded as India's No. 1 Bank at the FinancialExpress Best Banks Awards 2011, and for the third consecutive year, received the 'Fastest Growing Bank' award at the Businessworld Best Bank Awards 2011, the 'Best Private Sector Bank' Award at Dun & Bradstreet - Polaris Software Banking Awards 2011, the 'Sustainable Bank of the Year (Asia/Pacific)' Award at FT/IFC Sustainable Finance Awards 2011, London, and
a 'Special Jury Commendation in the Best Private Sector Bank category' at the CNBC – TV 18 Best Bank and Financial Institution Awards in September 2011.

YES Bank was conferred the 'Indian Power Brand' at the Indian Power Brands – Global Conclave, London 2011; YES BANK also won the 'India's Fastest Growing Bank of the Year' award at the Bloomberg UTV Financial Leadership Awards 2011, and the 'Silver Shield for Excellence in Financial Reporting' by the Institute of Chartered Accountants of India in the Private Banks (including Cooperative Banks) category, by the Institutes of Chartered Accountants of India.

YES BANK also won seven awards at Asia's Best Employer Brand Awards for Continuous Innovation in HR Strategy at Work, Talent Management, Best HR Strategy in Line with Business, Excellence in HR through Technology, CEO of the Year Award, Brand Excellence in Banking, Financial Services & Insurance, Best Corporate Social Responsibility Practice (Overall) and the CMO Asia Awards for Excellence in Branding
and Marketing.

The Best Multi-channel Capability Project Award and the Best Financial Supply Chain Project award at The Asian Banker Technology Implementation Awards 2011, the Commercial Banking Project of the Year award for Innovation in Cash and Treasury Technology at The Banker Technology Awards 2011 as well as the Financial Insights Innovation award 2012 for Innovation in Payments were presented to YES BANK.

With best-in-class Human Capital of over 5,500 YES BANKers, and focused vision and strategy encompassing Version 2.0, these recognitions will further act as key drivers of sustained growth and will help propel the Bank for its further take-off to become the Best Quality Bank of the World in India.

While we have the added responsibility of performing significantly better every year, and maximize value for all stakeholders, we remain committed to pursuing the highest levels of professional integrity, ethical standards, highest levels of compliance and the most transparent corporate governance norms, which have been the cornerstone of our success in the last seven years.

I take this opportunity to thank my entire management team for the commendable performance, dedication and hardwork put in over the past several years. I sincerely believe that with the continued support of our valued stakeholders, we will achieve our destination vision for Version 2.0 - Building the Best Quality Bank of the World in India, with a strong organizational character reflected in our Human Resources as the "Professionals' Bank of India".

Thank you.

Sincerely,
Dr. Rana Kapoor
Founder, Managing Director & CEO