YES Bank Q1 results: Earnings preview, things to watch, share price targets & more

YES Bank is scheduled to announce its earnings for the quarter ended on June 30, 2024 on Saturday, July 20. Market participants tracking the lender have mixed views on the private lender as they expect it to report some growth but the outlook remains bleak for it.

According to the market experts, YES Bank may report a strong year-on-year (YoY) performance but its sequential performance (QoQ) may remain subdued. The rising cost of funds may dent its margin and loan-book growth, whereas return of assets (RoA)will be keenly watched by the street participants.

Besides net interest income (NIIs) witnessing high single digit growths, net interest margins (NIMs) may remain flat. Management commentary on the future growth outlook, loan book expansion and stake sale by key shareholders will be key pointers to watch out it said.

Kotak Institutional Equities expects weak NII growth as healthy loan growth will be offset by rising cost of funds. As seen recently, the bank has slowed growth in unsecured loans given the increase in delinquency rates. Deposit growth at 21 per cent YoY is ahead of loan growth and strong.

It said net interest income at Rs 2,141.3 crore, up 7.1 per cent YoY, while pre-provisioning profit is seen at Rs 902.5 crore rising 10.3 per cent YoY. Net profit may be at Rs 451.9 crore, rising 31.9 per cent on a yearly basis. Slippages may fall 36 basis points (bps).

"We expect NIM at 2.3 per cent but there is likely to be a lot of volatility given the nature of income booked when security receipts mature. We should see steady traction on recovery and upgrades this quarter. Earnings impact is difficult to forecast given the nature of provisioning policy. Focus is shifting towards rebuilding the business for the bank," Kotak said.

YES Bank Ltd shares dropped more than 3 per cent to Rs 24.96 during the trading session on Friday, with its market capitalization holding above Rs 78,500 crore. The stock had settled at Rs 25.76 in the previous trading session on Thursday.

The outlook for YES Bank remains positive, primarily driven by the improvement in the bank's asset quality and capitalization over recent years. Despite a temporary weakness in profitability due to higher funding costs, we anticipate that the bank will report a good set of numbers for Q1FY25, said Manish Chowdhury, Head of Research at StoxBox

"Lower provisions and a gradual reduction in operating expenses are expected to enhance the bank's bottom line. The bank's strategic focus on increasing its priority sector lending book is projected to boost its return on assets trajectory moving forward. The expansion of its branch network and strong new disbursements in the retail and SME sectors are expected to contribute to the healthy overall performance," he said.

Anand Rathi Shares & Stock Brokers sees YES Bank to report net interest income of Rs 2,185.6 crore, up 8 per cent on a yearly basis, while PPOP is seen at Rs 922.8 crore, rising 1.82 per cent YoY. Net profit may come in at Rs 386.2 crore, increased 12.7 per cent but down 14.5 per cent sequentially. The brokerage has a 'sell' rating on the stock with a target price of Rs 24.

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