Fri Nov 01 15:20:53 UTC 2024: ## YES Bank Shares Surge on Strong Earnings, But Analyst Remains Skeptical

**Mumbai, India** – Shares of YES Bank Ltd surged by 10% on Monday, boosted by a strong earnings report showcasing a 2.5 times year-on-year (YoY) rise in earnings growth. This growth was attributed to a 40% decline in provisions and a 20% YoY increase in operating profit.

The stock, however, faced a contrasting view from Kotak Institutional Equities, who remain unimpressed by the performance, citing continued stress in retail loans. “We maintain SELL rating…as we watch through the developments in the retail loan book,” Kotak said in a statement.

While YES Bank saw impressive improvements in its financial performance, including a 15% YoY increase in net interest income (NII) and a steady Net Interest Margin (NIM) at 2.4%, Kotak highlighted concerns regarding the bank’s asset quality.

“There was a mixed performance on asset quality front, with retail showing persistent weakness,” Kotak said. The brokerage firm noted that credit costs, though reduced due to provision releases from the security receipts portfolio, were still elevated due to high slippages in retail loans.

Despite the positive financial figures, Kotak expressed concerns about the bank’s loan quality and its ability to sustain profitability. The brokerage pointed out that the bank’s recovery in return ratios is likely to be slow and requires tangible evidence of superior underwriting and visibility in NIM improvement.

Despite the positive financial figures, Kotak expressed concerns about the bank’s loan quality and its ability to sustain profitability. The brokerage pointed out that the bank’s recovery in return ratios is likely to be slow and requires tangible evidence of superior underwriting and visibility in NIM improvement.

The YES Bank management, however, highlighted their commitment to rebuilding the franchise and emphasized their focus on deposit mobilization, evident in the 30% YoY growth in CASA (Current Account, Savings Account) deposits.

While the bank has shown signs of progress, the market will continue to watch closely the evolution of its asset quality and its ability to deliver sustained profitability. The next few quarters will be crucial for YES Bank to demonstrate a robust recovery and address concerns raised by analysts.

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