YESBANK - Yes Bank Ltd. Share Price

Management's outlook for YES Bank, as articulated by Mr. Vinay M. Tonse, indicates a strong focus on sustainable growth alongside maintaining stable asset quality. The Bank aims to continue investing in its people, products, processes, and technology to strengthen its foundation.

Key forward-looking points provided by management include:

1. Growth Strategy: YES Bank targets a loan growth rate in line with industry expectations, aiming for 13% to 15% growth in the upcoming fiscal year.

2. Profitability Goals: The management intends to improve Return on Assets (ROA) to beyond 1% by enhancing core profitability, targeting an increase of 25 to 50 basis points from current levels.

3. Net Interest Margin (NIM): While the current NIM is at 2.7%, management envisions potential increases, with a long-term target range of 3.25% to 3.5% over the next three years as they reduce reliance on high-cost borrowings and enhance deposit pricing strategies.

4. Asset Quality: The Bank reported the lowest Gross Non-Performing Assets (GNPA) ratio of 1.3% and aims to maintain this healthy asset quality with continued effective credit risk management.

5. CASA Growth: For FY26, the CASA (Current Account Savings Account) deposits grew to INR 1.12 lakh crores, reflecting strong customer engagement, with targets to further enhance this growth.

6. Regulatory Compliance: Affirming its commitment, the Bank has achieved a second consecutive year of 100% compliance in Priority Sector Lending (PSL), which is expected to drop mandated deposits below 5% by FY27.

7. New Initiatives: Management is focused on enhancing the customer experience through a unified banking approach ("One YES Bank") and expanding its digital capabilities in the payments ecosystem.

In summary, YES Bank's management expresses confidence in its operational strengths while laying out a roadmap for growth, improved profitability, and robust asset quality in the year ahead.

Question 1: "How are you looking at growth in the Bank for the next 1 year? Is there anything you're waiting for to accelerate in terms of any of the Balance Sheet metrics? Or do you think we can start with 15% plus growth?"

Answer: We aim for loan growth to align with or surpass industry levels, targeting 14% to 15%. Our current focus on retail disbursement reflects a strong upward momentum, particularly post-December. While we've seen an 11% Y-o-Y advance growth, our expectations for next fiscal are optimistic as we pursue a balanced growth strategy across segments.

Question 2: "What is the average CASA growth in quarter 4, and how do we aim to grow that in line with loan growth?"

Answer: In Q4, our CASA grew about 4% sequentially, maintaining an 11% year-on-year growth rate. Our strategy focuses on improving acquisition through branches and digital platforms while enhancing customer journeys to capture a larger share of primary banking, ultimately achieving our 14%-15% growth target.

Question 3: "Should we expect this trajectory of margin expansion to continue Q-o-Q?"

Answer: We're projecting a minimum RIDF rundown of INR 6,500 crores next fiscal, which should support margin expansion. As we exit FY26 at around 2.7% NIM, we anticipate continued improvement driven by reductions in high-cost deposit balances and retained advantages from our funding strategy.

Question 4: "Do you envisage any change in the loan mix between Retail, Wholesale, Commercial due to SMBC's influence as the largest shareholder?"

Answer: Our Retail growth is significant, with expectations to normalize around 20-25%. We aim for 10-11% growth in the Retail book next year, while Corporate advances are already at about 20%. Our mix may shift mildly, but we expect to maintain a balanced growth profile across segments.

Question 5: "What is your target balance sheet size in terms of loan book for the next year?"

Answer: We anticipate growth rates in the range of 13% to 15%, aiming to align with industry standards. Specific loan book size targets will be determined by asset quality and market dynamics as we progress through the year.

Question 6: "Will the RIDF reduction trajectory remain linear post-1-year?"

Answer: The pace of RIDF reduction will taper after FY27, with FY28 potentially mirroring FY27's reduction rates, but we'll observe slower declines in FY29 and FY30 due to maturities.

Question 7: "How do you see ROA trajectory evolving for FY27 and beyond?"

Answer: Exiting FY26 with an ROA of 1% is our goal, but we also aim to enhance it further by 25-30 basis points through improved margins, discipline in cost management, and additional recoveries from asset resolution processes in FY27.

Question 8: "Is there a plan for the RIDF to improve loan growth and NIM?"

Answer: We expect RIDF's reduction will support NIM growth, with a targeted structural margin of 3.25% to 3.5% over the next few years. Our approach includes reducing deposit costs and enhancing asset yields through improved loan growth.