Phani Sekhar of Angel Broking told CNBC-TV18, "YES Bank is a good bank and poor asset quality is not really relevant for the bank. What matters more is this sudden increase in the short-term interest rates because it is predominantly a wholesale funded bank. On top of it since 40 percent of the total income is contributed by the non interest income, any more slowdown in the macro environment and the corporate activity is going to hurt the bank very badly because even at 3 percent net interest margin it is operating at almost 22 percent return on equity, which is pretty high and has room to correct."
"What this will mean is over a period of time if this slowdown persists for more than two-three quarters then there can be severe decline or growth will be very difficult in the bottom-line. So considering all that and also considering the fact that the valuations have corrected at very attractive levels, I would advise the investor to hold on, but be ready to average these shares at lower levels," Sekhar said.
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