Yes Bank: Banking on growth
The bank’s focus on corporate clients has helped it maintain margins of over three per cent.
However, since inception, the bank has only opened 185 branches and, therefore, its current account savings account (CASA) deposit accounts for only 10 per cent of its total deposits. The bank intends to change this and open at least 750 branches by 2015. This retail drive should help the bank garner low-cost deposits and also enter the lucrative retail lending market.
So far, the bank has primarily focused on corporate clients and this reflects in its loan book, too, which has 70 per cent exposure to corporates. This strategy has helped the bank maintain margins of over three per cent, as it has successfully managed to pass on increased interest costs to the borrowers, claim analysts.
Aalok Shah of India Infoline believes, they have the best in-class asset quality, which is why the bank’s gross non-performing assets were contained at 0.8 per cent even during the bad years. The management has guided its loan growth to be around 2x the industry’s loan growth.
The bank’s total business is also estimated to increase at a CAGR of 35 per cent till FY15 with a total business size of Rs 2.25 lakh crore. Analysts believe the bank is following the same path as Axis and HDFC Bank did in the initial years. What the Street also likes is its focus on niche growth sectors, which were not a major focus area for other banks. The key knowledge sectors that Yes Bank focuses on include, food and agri business, media and entertainment, information technology, telecommunications, infrastructure, engineering and healthcare.