Yes Bank targets larger share of retail market

By Devidutta Tripathy

MUMBAI (Reuters) - Yes Bank, India's fourth-largest private sector lender by assets, aims to increase the proportion of retail deposits on its books to 60 percent in three years as it expands its appeal to consumers to take on its bigger rivals.

The bank, one of India's newest, has previously focused on providing loans and deposits for wholesale clients and businesses. But a senior executive said that would change as it expands its branch network and launches new products.

"India is a consumption story. Retail will remain a very important play there," Pralay Mondal, senior group president of retail and business banking, told Reuters.

"Obviously, our wholesale franchise will continue to do well. But the scale you can get in retail; we will also leverage that."

Yes Bank's retail deposits, including low-cost current and savings accounts (CASA), contributed about 45 percent to total deposits in the past quarter. That is more than double a level of 20 percent three years ago, Mondal said.

Total deposits have grown 17-18 percent over the three years but Yes Bank's CASA ratio, at nearly 23 percent, is lower than those of its rivals and the bank aims to lift the ratio to 30 percent in the near future, Mondal said.

Loans to retail and small businesses account for a little more than a quarter of its total portfolio.

But while the share of retail deposits is set to rise to account for up to 50 percent this financial year, the bank said it would not grow at breakneck speed everywhere. It will exercise particular caution over lending to individuals and small businesses "too fast, too early" in the cycle, Mondal said.

Many of India's banks are still nursing wounds from a combination of economic weakness and profligate lending, leaving public sector lenders in particular burdened with significant bad debt.

Loans to retail and small-and-medium enterprises will continue to make up about 30 percent of the total book until about 2018, after which it would be more comfortable with more rapid expansion, Mondal said.

Yes Bank, which started lending to home buyers in recent months, plans to offer credit cards by the end of next financial year, Mondal added.

Shares in the decade-old bank, which is valued at more than $5 billion, are up about 8 percent this year after more than doubling in 2014, outperforming the NSE banking index and the Nifty.

(Editing by Clara Ferreira Marques and David Goodman)