What to expect from Yes Bank Q4 earnings

Moneycontrol Bureau

Private sector lender Yes Bank is likely to grow its net profit by 29 percent year-on-year to Rs 349 crore in the fourth quarter (January - March). Net interest income or the difference between interest earned and paid out, would rise 39 percent y-o-y to Rs 622 crore, according to a poll estimate by CNBC TV18.

"The bank's retail expansion needs to be watched closely. So far, it has been growing its current and savings account base. With interest rates likely to fall this year, the bank's management commentary on incremental CASA growth is important," a senior banking analyst from a domestic brokerage associated with a bank told moneycontrol.com.

The credit quality is expected to improve although the loan growth is likely to outpace the industry growth. Yes Bank may expand its loans by 22 percent y-o-y while deposits would grow 20 percent. Hence, credit growth is not expected to come at the cost of poor asset quality.

The bank had some credit exposure to the debt ridden Hyderabad based Deccan Chronicle and Pune-based Suzlon Energy but in small quantities. While the lender has already provided against those credit exposure, a minor portion (around 10-15 percent) is still left for Deccan. It is to be seen whether the bank completes the full provisioning.

In the last three months, Yes Bank shares dropped more than 9 percent as against a fall of 6 percent in the Bank Nifty – the broader index for banking stocks.

"Yes shares have actually corrected. It is now high time to lap up those shares again. Irrespective of any market buzz, the bank will continue to grow," said a banking analyst from a foreign brokerage; who is expected to revise his call on Yes Bank from 'hold' to 'buy'.

Market is agog with the buzz that that Yes Bank may be a potential target for acquisition in longer run. Promoters may exit the banking business by selling it at a premium.

"This may not happen anytime soon. But, one cannot rule out such possibilities in longer run," quipped a senior official from a rating agency.

saikat.das@network18online.com