YES Bank share trades flat ahead of Q2 earnings

Shares of private sector lender YES Bank traded flat on Friday as the bank was set to announce its September quarter earnings later in the day.

Earlier at the opening bell, YES Bank share gained 1.8% to hit an intraday high of Rs 12.95 against the earlier close of Rs 12.72 on BSE. Later, the stock erased gains and hit an intraday low of Rs 12.65.

The share has gained 1.18% in the last week but fallen 72% since the beginning of the year. YES Bank shares trade higher than 5-day moving averages but lower than 20, 50, 100 and 200-day moving averages. Market capitalisation of the lender stood at Rs 32,145.44 crore as of today's session.

Kotak Institutional Equities said it expects lender's outstanding loans to decline about 30% YoY but the key positive would be the recovery in deposit mobilisation. The brokerage added the company is expected to report pressure on the revenue front. Management commentary on the progress of below investment grade and recovery from existing bad loans would be the key monitorable, it added.

The brokerage expects net interest margin (NIM) to remain unchanged QoQ at 3% and it expects a decline in net interest income (NII) of around 12%. YES Bank's asset quality ratios to see further deterioration and revenue pressure may remain high also due to weak fee income (sharp decline), Kotak added.

HDFC Securities said in its note, "The recovery from stressed assets could prove to be difficult. Proposal to migrate stressed assets to a separate entity in a JV could be beneficial for the bank. The near-term challenge for investors in YES Bank would be the inability to forecast near-term slippages, the direction of credit costs and movement of NPLs".

The brokerage also added that a higher-than-expected deterioration in the asset quality could resulting in the erosion of YES Bank's Tier-I capital. Fresh formation of bad loans that would keep provision high and return ratio compressed for a longer time, HDFC Securities said.

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