BL interview. FY24 will be a year of building capabilities: YES Bank CEO

It depends on how you define it. If it’s about taking care of the legacy issues, I would be positive. If turnaround means that the bank is improving its profitability, there are a lot of things to be done. Our subsequent phase primarily revolves around augmenting profitability and rewarding our stakeholders.

In the past eight quarters, we have witnessed consistent growth in our business and operating profits. Any fluctuations observed in the net profit are solely attributable to the aging provisioning requirements and the occasional mismatch between provisioning requirements and new recoveries within specific quarters.

As a strategic initiative, the bank underwent a substantial shift in its loan portfolio allocation in March 2020. Formerly, a significant emphasis was placed on corporate loans, which was worked upon and changed later. Presently, large corporate loans account for 28 per cent of our total loan portfolio, while mid-sized corporate loans comprise approximately 14 - 15 per cent. The remaining portion is held by Small and Medium Enterprises (SMEs) and retail loans. Going forward, our intention is to maintain the existing composition and expect corporate loan growth to align with the growth observed in the retail sector, without diminishing further.

Secondly, our deposit base has doubled over the past three years without raising interest rates. The peak rate differential compared to other banks has decreased from 150 to 50 basis points. Our current account experienced a 30 per cent growth last year, and we aim to further expand our CASA segment. We add 1,30,000 new customers to CASA and deposits every month. Also, the bank, having undergone a period of turbulence, faced challenges in meeting priority targets. Presently, the resulting drag on Return on Assets (ROA) stands at 35 basis points. Since 2020, we have been successfully fulfilling the PSL requirements on an overall basis. The only subcategory where we are not meeting the target is that of small and marginal farmers, a problem we are trying to solve organically and inorganically.

I can assert with confidence that the proficiency exhibited by our team in managing corporate loans is exceptional. The sole concern in the past stemmed from the centralised decision-making approach, which is no longer the case. Additionally, we have maintained a good relationship with borrowers. Owing to adequate capital, liquidity, relationship, and skill sets within the bank, we are poised to pursue growth in a judicious manner. Our approach will be highly meticulous and not write big-ticket loans.

Our intention isn’t to lead a consortium. Instead, we would find satisfaction in being involved as a contributor to the consortium process.

We currently don’t have asset classes that offer higher yields, including the potential realm of affordable housing. It is crucial to establish the requisite capabilities within the bank before venturing into such asset classes. For instance, banks that offer car loans tend to focus on second-hand cars due to higher yields. Similarly, providing personal loans to our existing bank customers or other salaried individuals presents a better yield; a large chunk of our customer base is the salaried class. It is imperative that we first develop the necessary in-house capabilities with our existing customer base, to expand our reach to non-bank customers. We also maintain a steadfast commitment to ensure that quality is never compromised.

Indeed. We are progressively transitioning towards asset classes that offer a higher yield to enhance profitability. The four factors that can contribute to our profits are - improving the CASA ratio, venturing into asset classes, reducing the impact on RIDF, and fee income. We can also explore cross-selling opportunities and earn additional fees.

Not at this stage. While there has been considerable discourse, not a single example of such a separation being implemented has been encountered thus far.

The question pertains to the potential value any inorganic growth would bring to the bank. Should an opportunity arise that holds the potential to enhance our value, we shall certainly explore it. However, our objective does not revolve around becoming a larger player in the industry.