Yes Bank Ltd shares rose as much as 4.4% in early trade on Wednesday, i.e. 17 July, ahead of the bank’s June quarter earnings announcement later in the day. The stock had risen over 11% in the previous trading session as well. However, brokerage houses are not very positive and expect Yes Bank to see a sharp decline in Q1 net profit on muted loan growth and weak asset quality.
ICICI Direct said exposure to a stressed pool of assets of around Rs 10,000 crore is expected to keep provisions higher at around Rs 1,208 crore which may keep the pressure on earnings. Hence, profit after tax (PAT) is expected to fall 85% year-on-year to Rs 188 crore, said the brokerage house.
ICICI Direct also said pressure on asset quality is expected to persist due to continuance in recognition of stressed assets, hence GNPA (gross non-performing assets) ratio is expected to increase around 67 basis points to 3.89%.
Prabhudas Lilladher also expects 84% decline in Yes Bank’s profitability. The brokerage house said the bank could continue to face a challenging quarter due to rising non-performing assets (NPAs). “Most business metrics should slow down as capital remains at critical levels. Increase in stress ratios could add to the uncertainty of earnings,” it added.
Prabhudas Lilladher expects pre-provision operating profit (PPoP) to fall by a steep 34% year-on-year, while net interest income growth is expected to be in single digits.
Another brokerage house Kotak Securities said: “We expect loan growth to decelerate further to around 8% year-on-year. Revenue pressure will remain high due to weak fee income growth and NIM (net interest margin) pressure. Asset quality ratios could further deteriorate.” Kotak also sees pre-provision operating profit declining by a whopping 45% year-on-year.
At 10:21 am, Yes Bank shares were trading at Rs 105.15, up 1.25%, on BSE.
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