Yes Bank surges as Q3 profit beats estimates

The stock moved higher by 8% to Rs 725, bouncing back an over 11% from intra-day low of Rs 651 on BSE.

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Yes Bank has surged nearly 8% to Rs 725, bouncing back 11% from intra-day decline on the BSE, after the bank reported better-than-expected 25% year-on-year (yoy) jump in net profit at Rs 676 crore for the third quarter ended December 2015 (Q3FY16).

Net interest income (interest earned minus interest expended) grew 27% yoy at Rs 1,157 crore, while non-interest income rose 39% at Rs 746 crore over the previous year quarter.

Analysts on an average had expected profit of Rs 627 crore on net interest income of Rs 1,133 crore for the quarter.

Net interest margin (NIM) also improved to 3.4% in Q3FY16 from 3.2% in Q3FY15 and 3.3% in Q2FY16.

“The performance driven by a steady increase in NII on the back of an improving retail franchise, improvements in NIM, RoA, RoE and overall preservation of asset quality,” said Rana Kapoor, managing director & CEO of Yes Bank.

The bank continues to show resilience on all asset quality parameters with an improving outlook going forward with credit costs for FY2015-16 being contained within 50 bps (previous credit cost guidance of 50-70 bps).

Gross non-performing assets (NPA) as a percentage of total loans rose to 0.66 % at end-December, from 0.61 % in the previous quarter. Net NPA stood at 0.22% in Q3FY16 against 0.20% in Q2FY16.

Angel Broking recommends Accumulate rating on the stock saying that the bank’s asset quality performance has held up well so far.

Going forward, we have factored higher provisions and slippages given the bank’s corporate exposure to metals and EPC. Even after factoring the higher provisions and slippages, we expect Yes Bank to deliver a CAGR of 20.5% in earnings for FY2015-17E, the broking firm said in a client note.

The stock hit low of Rs 651 on the BSE in early morning trade. The trading volumes on the counter jump nearly four-fold with a combined 11.26 million shares changed hands on the BSE and NSE till 01:20 p.m.