Shares of Yes Bank rose over 5% on BSE in early deals on Monday after the bank posted Q4 net profit on Saturday 367 crores as against the loss of 3,788 crore in the March quarter of the previous financial year.
Its gross non-performing assets (NPAs) as a percentage of total advances stood at 13.9 per cent as on March 31, down 150 basis points (bps) year-on-year and 80 bps lower than the previous quarter.
The main net interest income of the bank came in at 1,819 crore for the March quarter, which is 84% higher than the year-ago period. Net interest margin rose to 2.5%, while it posted loan growth of 8%.
Analysts at Nirmal Bang said the bank’s weak return ratio, coupled with attractive valuations of large-cap banks, makes it challenging to make a favorable case for Yes Bank. Brokerage maintains its sell rating Yes Bank shares With a target price (TP) of 12.8.
“The bank has guided for (1) 3% exit quarterly NIM (2) 2.4% opex/assets (3) 2% slippage (4) >0.75% ROA in FY13. Our numbers are significantly lower than management’s guidance, however, we will be watching the quarterly distribution closely to make changes to our estimates.”
Meanwhile, the private sector lender plans to set up an asset reconstruction company and expects to transfer all its bad loans to the entity by the end of June.
“We are aware of the risks from delay in resolution of stress pool, net labeled exposure of 5.3%, modest ROE profile during transition and supply overhang after expiry of locked-in shares. We held holds with unchanged target price. keep. 14,” ICICI Securities said in a note on Yes Bank.
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