What will drive Yes Bank's Q4! Net profit seen up 27%

Moneycontrol Bureau

Leading private sector lender Yes Bank is expected to post 27% year-on-year jump in the fourth quarter net profit at Rs 259 crore while net interest income or the difference between interests earned and paid out would grow at 30% to Rs 451.5 crore. Loans would expand at 14% y-o-y, according to a CNBC-TV18 Poll.

"Yes Bank has a structural weakness in the liability side. It has relatively lower share of current account and saving account (CASA)," Dinesh Sukhla, a banking analyst from Sharekhan brokerage told Moneycontrol.com.

"Though the bank had improved its CASA in Q3, this quarter too the growth momentum should continue. Retail expansion will be helpful bank’s growth going forward.  Retail deposit is a cheap source of funds compared to other avenues of fund raising," he said.

The bank is offering 6-7% rate of interest in its savings deposits. It is highest in the industry although, their retail portfolio size is very low. The bank’s CASA ratio was 13% in Q3.

A good increase in fee income, according to analysts, should also aid to the lender’s bottom line. Fee income would grow at 20% YoY during the Jan-March quarter.  Net interest margin or NIM is likely to be maintained in the range of 2.8-3%.

No asset quality issue should emerge fresh. This in turn, would bring down the requirement of provisions adding to the profit margin.

Due to aggressive branch expansion operating expenditure is expected to shot up 40% (140 branches added over past 1 year and further 30 expected to have been added in 4Q).

Likely drivers for Yes Bank’s Q4 earnings:

• Lower provisioning
• Fee income
• Higher interest income

saikat.das@network18online.com