Yes Bank Shares Jump 3% After Q1, But Brokerage Remains Bearish

Yes Bank‘s share price was upbeat on Monday morning after the company’s results beat street expectations. The stock went up around 3% to hit an intraday high of ₹25.99.

What Happened: The private lender reported a net profit of ₹502.43 crore for the quarter, marking a 46% increase from ₹342.5 crore in the same quarter of the previous year.

This figure surpassed Bloomberg's estimate of around ₹376 crore. Net interest income (NII), which is the difference between a bank’s income from lending activities and the interest paid to depositors, rose to ₹2,244 crore, a 12% increase from ₹1,999 crore reported in the same quarter last year.

Brokerage Reactions: Kotak Securities highlighted that Yes Bank’s 45% year-on-year earnings growth was primarily driven by a 40% decline in provisions and an 8% growth in operating profit. Slippages were at 2.1%, the lowest in almost eight quarters.

See Also: Reliance Shares Tank 3% After Muted Q1, But Brokerages Remain Bullish

Despite these improvements, the brokerage maintained its “sell” rating with a price target of ₹19, saying the risk-reward remains unfavourable and that underlying return on equity improvement is likely to be slow. The analysts note that a re-rating hinges on a better RoE profile driven by sharp net interest margin expansion, which appears unlikely in the medium term.

Over recent years, Yes Bank has improved the share of current account savings accounts and retail term deposits, although there has been a slight deterioration in the past few quarters, as per analysts. The bank has managed to enhance its liability profile while reducing the premium offered on term deposits.

Loan growth for the quarter was robust at 15% (up 1% quarter-on-quarter), led by a 29% increase in advances to small and medium enterprises, 25% growth in mid-corporate advances, and 14% growth in corporate advances.

However, retail growth was muted at 8%. The share of retail advances has been steadily increasing, while the share of corporate advances has been steadily declining for Yes Bank.

Price Action: Yes Bank’s share price was up 2.87% to trade at ₹25.48 shortly after market open on Monday.

Read Next: HDFC Bank Shares Flash Green As Analysts Cheer Better-Than-Expected Q1 Numbers

Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.