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YES BANK has been recognized amongst the Top and Fastest Growing Banks in various Indian Banking League Tables by prestigious media houses and Global Advisory Firms, and has received several national and international honours for our various Businesses including Corporate Investment Banking, Treasury, Transaction Banking, and Sustainable practices through Responsible Banking. YES BANK is steadily evolving as the Professionals’ Bank of India with the long term mission of “Building the Finest Quality Bank of the World in India” by 2020.

Key points

Strong NII, declining COFs help profits:

Yes Bank posted strong results for Q3FY2017 with a strong net interest income (NII) growth as well maintaining the asset quality. The NII for Q3FY2017 increased by 30.3% year on year (YoY) to Rs1,507.5crore on the back of strong advances and growth in the current and savings account (CASA). The net interest margin (NIM) expanded to 3.5% (up 10 basis points [BPS] from Q2FY2017). NIMs expansion was mainly due to the cost of funds (CoF) coming down due to softening interest rates and a rise in CASA deposits. While the treasury profit helped the Other income grow by 33.8% YoY to Rs998.3 crore, the bank is steadily building its fee income stream.

 Strong growth traction continues:

Yes Bank saw strong growth traction as its advances grew smartly by 38.7% YoY to Rs117,087 crore with Corporate Banking (which accounts for 68.9% of the advances) was up 42% YoY and Retail & Business banking business (including micro, small & medium enterprises [MSME]; forming 31.1% of the advances) was by 32% YoY. Deposits grew by 30.5% YoY to Rs132,375.8crore.

Performance highlights:.

The performance on CASA deposits front was robust (CASA ratio up 300BPS from Q2 to 33.3%), helped partly by the demonetisation drive but also indicating the improvement in retail segment. Both SA deposits (Rs29,348crore) and CA deposits (Rs14,778 crore) grew by 13% and 14% respectively since Q2FY2017. The management has indicated that amongst the small and medium enterprises (SME) clients, most are adopting the formal banking channel which is positive for the long term.

Brand Pillars:

The YES BANK brand is built around key Brand Pillars, which epitomize the growing strengths of the Bank. All communication and advertising has been created around these key brand pillars.

• Growth: YES BANK's core promise is growth for its internal and external stakeholders symbolized in ‘Say YES to Growth!’
• Trust: YES BANK's Promoters, Investors, and Top Management team are all of the highest pedigree with a demonstrated track record, thus inspiring and establishing a Trust Mark – ‘Say YES to Trust!’

• Innovation & Technology: YES BANK is establishing the highest standards in customer service by adopting cutting-edge, innovative Technology. The only thing constant about technology used at YES BANK is Evolution.

Valuation :

Highlights the fact:

1)Yes Bank, by virtue of its size (and thereby avoiding large-ticket problem loans), and business mix has been able to perform better than peers.

2)Yes Bank has consciously decided to pursue balance sheet growth via customer assets (advances plus credit substitutes).

3)Yes Bank’s asset quality has been good with the gross non-performing advances (GNPA) stable at 0.85% and net non-performing advances (NNPA) also stable at 0.29% as compared with Q2 and credit cost at only 8BPS for Q3FY2017.

4)Faster deposit repricing compared to assets may actually help the bank to sustain or improve its margins in the near term.

5)The standard restructured advances were at Rs500 crore (42BPS of advances) having reduced from 0.67% (Rs568.3 crore) in Q3FY2016. There was no additional restructuring and no sale to asset reconstruction company during the quarter and the total security receipts (SRs) stood at Rs258 crore (22BPS of the advances) which make for a robust performance in the backdrop of rampant asset quality stress among its banking peers.

Technically View:

The stock is currently trading around 50 days and 100 days, moving average that is all about good positive moov& uptrend signal on daily base. RSI &MFI is present at 57 and 78respectivally, which is uptrend& showing the sideways formation for the short term period. The stock is currently in the upward formation and when it hold above 1400 then somemore upside is expecting with major support is found 1360 level. MACD line is greaterthen signal line 10 day Avg Volume is very high.

VALUATION & OUTLOOK:

Yes Bank is available at 2.9x FY2018 BV which is attractive given its comfortable capital position. It has a capital to risk (weighted) assets ratio (CRAR) of 16.9% (Tier-1 at 12.2%), attractive return on equity (RoE) of 20+% and return on asset (RoA) of 1.8+%.

It has successfully built an attractive franchise and a steadily growing retail business. We are positive on Yes Bank and maintain a “Buy” rating on the stock with an unchanged price target of Rs1,520.

We retain our Buy recommend in this script with a price target of Rs 1500-1520 in the very short term outlook. So Entry would be around 1360-1380as recomanded in this counter.