YES ahead of Q4 results preview: Here are the expectations from five brokerages

YES Bank Ltd is set to announce its earnings for the quarter and financial year ending on March 31, 2024 on Saturday, April 27. The private sector lender is likely to report a strong profit growth despite a moderation in the net interest income (NIIs) and net interest margins (NIMs), said analysts.

Brokerage firms tracking YES Bank said that the lender may report a strong performance in the terms of bottomline, but the net interest income and asset quality may remain under pressure on the back of rising cost of funds. They believe that management's view of the roadmap for normalcy, outlook on asset quality, cost of funds and return of assets shall be the key things to watch out for.

JM Financial pegs YES Bank's net profit at Rs 427.2 crore, up 111.1 per cent on a year-on-year (YoY) and 84.6 per cent on a sequential basis (QoQ). However, the brokerage expects pre-provisioning operating profit (PPOP) at Rs 688.8 crore, down 22.5 per cent YoY and 20.3 per cent QoQ. NIIs may come in at Rs 2,042.1 crore, slipping 3 per cent YoY but up 1.3 per cent QoQ.

Anand Rathi Research expects PAT to come in at Rs 252 crore, up 24.5 per cent YoY and 8.9 per cent QoQ. The brokerage pegs PPOP at Rs 895.9 crore, rising 0.8 per cent YoY and 3.9 per cent QoQ. NIIs are seen at Rs 2,025.6 crore, down 3.8 per cent YoY and flattish sequentially. The brokerage currently has a 'sell' rating on the stock.

Kotak Institutional Equities sees YES Bank's NII at Rs 2,105.3 crore, up 3.8 per cent QoQ but down 0.6 per cent QoQ. PPOP may come in at Rs 888.9 crore, up 11.8 per cent QoQ and 8.7 per cent YoY. The lender may report a net profit of Rs 202.4 crore, up 30.4 per cent YoY and 14 per cent QoQ.

Shares of YES Bank settled at Rs 26.15 on the trading session on Friday, rising about three-fourth a per cent for the day. The private lender boasted a total market capitalisation of more than Rs 75,000 crore.

"We expect flat to decline in NII as the industry average loan growth will be offset by rising cost of funds. We would need to see the progress in the retail portfolio, especially unsecured loans where the bank has turned cautious. Deposit growth of 22 per cent yoy is ahead of loan growth and exceptionally strong," said Kotak. It pegs in NIM of 2.7 per cent but there is likely to be a lot of volatility, it said.

"We should see healthy traction on recovery and upgrades this quarter. We are building in slippages of Rs 1,200 crore. The earnings impact is difficult to forecast, given the nature of provisioning policy," said Kotak. The focus is shifting to rebuilding the business. Conversations would be on growth and return to normalised levels of business operations, it added further.

Nuvama Institutional Equities said that YES Bank NIMs may decline 15 bps leading to a 2 per cent fall in NII. Core PPOP may take a hit of 13 per cent in the quarter. "Higher CoF will lead to lower NIM and NII," said Nuvama in its report.

On a reported balance sheet basis, loan growth stood at 12 per cent YoY and deposit growth was strong at 22.5 per cent YoY led by robust growth of 23 per cent YoY in CASA deposits. As a result, the CASA ratio improved to 30.9 per cent, said Nomura. Credit-to-deposit ratio moderated to 86 per cent and liquidity coverage ratio (LCR) stood at 116 per cent, it said.

"We expect Yes Bank to deliver RoA of 0.5 per cent and 0.8 per cent and RoE of 4.5 per cent and 7.5 per cent in FY25F and FY26F, respectively," Nomuda sadded. "Yes Bank’s return profile, though on an improving trajectory, is significantly lower than peers’. Further, Yes Bank trades at 1.6 times 1-year-forward. BVPS adequately captures the positives," it added with a 'neutral' view.