Despite challenges within the sector, particularly post-demonetisation, YES Bank continued to deliver steady performance across parameters.

Strong loan growth, healthy profitability and stable asset quality, just about sums up the bank’s performance in the latest December quarter.

YES Bank has been delivering year-on-year growth of 20-25 per cent in loans for many quarters.

The December quarter has not seen much deviation from the past trend; the loan growth has only been stronger at 38.7 per cent, much higher than the muted 5 per cent growth at the system level as of December.

The growth in the bank’s large corporate, retail and SME segments continues to be on a strong footing.

The new marginal cost of funds-based lending rate (MCLR) framework, introduced by the RBI last year, has helped the bank offer competitive rates and tap into opportunities in the large corporate segment. The corporate book contributes the chunk — 68.9 per cent of total loans.

Capital for growth

YES Bank’s robust growth had led to concerns about the bank’s ability to raise the requisite capital to continue funding its growth in the coming quarters. But the bank has raised ₹3,000 crore through Additional Tier-I bonds during the December quarter.

This should help fund the bank’s growth for the next 12-18 months. The Tier-I capital stood at 12.2 per cent as of the December quarter.

In any case, YES Bank’s strong return on equity (ROE) will continue to keep its growth in good stead.

The bank’s ROE, which has been in the 18-25 per cent range in the last couple of years, has kept the growth in capital intact through internal accretion. In the December quarter, the ROE stood at 22.3 per cent.

Low-cost deposits

Aside from the strong growth in loans, improving low-cost current account savings account (CASA) ratio continues to aid margin expansion.

The bank has been able to grow its CASA deposits at over 40 per cent annually over the last five years.

In the December quarter, aided by the influx of deposits post-demonetisation, the bank grew its CASA by a robust 63 per cent year-on-year.

The net interest margin hence, improved to 3.5 per cent in the December quarter, from 3.4 per cent in the previous quarter.

Asset quality

Despite its higher corporate exposure and stellar growth in loans, YES Bank’s asset quality continues to be stable. In the December quarter, the bank’s gross non-performing assets stood at 0.85 per cent of loans, lower than that of most private banks.

Over the past five years, the bank’s GNPA has been below 1 per cent of loans.

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