CMP 526.00

Target Price 589.00

ISIN: INE528G01019

JAN 17th

, 2013

YES BANK LTD Result Update: Q3 FY13

BUYBUYBUYBUY

Stock Data

Sector Banking

BSE Code 532648

Face Value / Div. Per Share 10.00

52wk. High / Low (Rs.) 535.00/278.15

Volume (2wk. Avg ) 348000

Market Cap ( Rs in mn ) 144454.24

Annual Estimated Results (A*: Actual / E*: Estimated)

Years FY12A FY13E FY14E

Net Income 63073.50 85149.23 106691.98

NII 24727.50 33198.46 41079.31

Net Profit 9769.90 12622.71 15573.08

EPS 27.68 35.30 43.55

P/E 14.60 11.44 9.28

Shareholding Pattern (%)

1 Year Comparative Graph

BSE SENSEX YES BANK LTD

Source: Company Data, Firstcall Research

SYNOPSIS

YES BANK, India’s new age private sector

Bank, is a state-of-the-art high quality,

customer-centric, service-driven Bank

catering to the “Future Businesses of India”.

Bank’s Capital Adequacy Ratio registered

at 18.00% as on 31.12.12.

CASA deposits grew by 74.9% y-o-y to Rs.

103408 mn taking the CASA ratio to 18.3%

as at December 31, 2012 up from12.6% as

of December 31, 2011.

Net profit for Q3 FY13 was up 34.72% to

Rs. 3423.10 mn as compared to Rs. 2540.90

mn for Q3FY12 driven primarily by

sustained & diversified revenue growth.

YES BANK added 12 branches across the

country during the quarter, taking the total

branch count to 412.

Total Deposits grew by 20.2% to Rs.

564005 mn as at December 31, 2012 from

Rs.469291 mn as at December 30, 2011.

YES BANK has partnered with American

Express to offer a credit card to retail and

micro SME customers.

Net Income and PAT of the company are

expected to grow at a CAGR of 38% and

29% over 2011 to 2014E respectively.

Peer Groups CMP Market Cap EPS P/E (x) P/BV(x) Dividend

Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

Yes Bank 526.00 144454.24 27.68 14.60 2.43 40.00

ICICI Bank 1173.05 1354064.60 64.17 18.29 2.24 165.00

Axis Bank 1415.05 604062.10 114.5 12.32 2.65 160.00

SBI 2439.00 1638558.40 219.40 11.13 1.95 350.00

Investment Highlights

Results updates- Q3 FY13,

The company’s net profit jumps to Rs. 3423.10 million as against Rs. 2540.90 million in the corresponding

quarter ending of previous year, an increase of 34.72%. Revenue for the quarter rose 26.70% to Rs. 21336.40

million from Rs. 16840.60 million, when compared with the prior year period. Reported earnings per share of the

company stood at Rs. 9.57 a share during the quarter, registering 32.60% an increase over previous year period.

Net Interest Income is Rs. 8975.10 millions as against Rs. 6390.10 millions in the corresponding period of the

previous year.

Months Dec-12 Dec-11 % Change

Net Income 21336.40 16840.60 26.70%

PAT 3423.10 2540.90 34.72%

EPS 9.57 7.22 32.60%

Segment Revenue

Particulars (Rs.mn.) Q3 FY13

Wholesale Banking 15777.20

Treasury Operations 7312.90

Retailing Banking 1088.70

Other Banking Operations 56.80

Total 24235.60

Latest Updates

• Current and Savings Account (CASA) deposits grew by 74.9% y-o-y to Rs. 103408.00 mn taking the CASA

ratio to 18.3% as at December 31, 2012 up from 12.6% as of December 31, 2011.

• The Savings Account deposits grew by 307.8% y-o-y to Rs. 49048.00 mn as of December 31, 2012 and the

Current Account deposits grew by 15.4% to Rs. 54360.00 mn as of December 31, 2012.

• Total Deposits grew by 20.2% to Rs. 564005.00 mn as at December 31, 2012 from Rs. 469291.00 mn as at

December 31, 2011. The Bank’s Total Assets grew by 22.4% to Rs. 870173.00 mn as at December 31, 2012

from Rs. 711091.00 mn as at December 31, 2011.

• Allotment of Shares

Yes Bank Ltd has allotted 5,13,050 equity shares of face value of Rs. 10/- each on January 04, 2013 under the

Joining Employee Stock Option Plan-Ill (JESOP-Ill), YBL ESOP and YBL JESOP V/PESOP-II.

• Retail Products

� YES BANK launched Insta Online Savings Account, through which a Savings Account can be opened from the

comfort of home or office. Additionally, one can even pick an Account Number of choice.

� YES BANK in collaboration with American Express offered American Express Cards to its valued customers,

with multiple benefits including the industry leading Membership Rewards program, best in class service and

access to a worldwide network of millions of merchants across 200 countries. These cards are currently

being offered from YES BANK’s branches in seven cities.

Expansion/ Investment Initiatives

� YES BANK YES BANK has a total of 412 branches across the country as on December 31, 2012.

� YES BANK added 29 ATMs to its network during the quarter, taking the total count to 723 ATMs as on

December 31, 2012.

� Employee strength stood at 6,532 as on December 31, 2012; an increase of 30% over December 31, 2011.

Awards & Recognitions

� YES BANK was awarded The Strongest Bank in India by the Asian Banker, a leading publication in Asia Pacific

based out of Singapore

� YES BANK was adjudged the Best Midsized Bank by the Business Today-KPMG study 2012

� YES BANK was awarded the Best Bank (Mid-Size) by the Businessworld Best Bank Awards

� YES BANK was awarded the Golden Peacock Global Award for Sustainability, 2012 at the London Global

Convention and Golden Peacock Awards presentation.

� YES BANK won the IPE Corporate Excellence Award – Banking and Finance 2012

� YES BANK won the Dataquest Emerging Leaders in Business Technology 2012 at DQ Live Awards

� YES BANK, won the Customer Centric Brand Award, Sustainable Marketing Excellence Award and Cause

Related Marketing Award, at the Zee Brand Excellence Award (BFSI Sector)

� YES BANK was conferred with the “Best Overall Mobile Lifeline Launch” award at Connected World Forum

Awards in Dubai.

Knowledge Initiatives

� YES BANK was the Knowledge Banking Partner for the India Pension Fund Congress 2012 held in Mumbai.

� YES BANK was a Knowledge Partner to the YPO Congress in Kolkata.

� YES BANK was the Knowledge Partner for the 8th ASSOCHAM Annual Banking Summit – ‘Poised for Explosive

Growth’.

Company Profile

YES BANK, India’s new age private sector Bank, is a state-of-the-art high quality, customer-centric, service-driven

Bank catering to the “Future Businesses of India”. An outcome of the professional & entrepreneurial commitment

of its Promoter & Founder, Dr. Rana Kapoor and his top management team, YES BANK is India’s fourth largest

private sector bank (by balance sheet dated March 31, 2012).

Since its inception in 2004, YES BANK has fructified into a ‘“Full Service Commercial Bank” that has steadily built

Corporate and Institutional Banking, Financial Markets, Investment Banking, Corporate Finance, Branch Banking,

Business and Transaction Banking, and Wealth Management business lines across the country, and is well

equipped to offer a range of products and services to corporate and retail customers. YES BANK has adopted

international best practices, the highest standards of service quality and operational excellence, and offers

comprehensive banking and financial solutions to all its valued customers. Today, YES BANK has a widespread

branch network of over 400 branches across 275 cities, with 700+ ATMs and 2 National Operating Centers in

Mumbai and Gurgaon.

YES BANK has been recognized amongst the Top and Fastest Growing Banks in various Indian Banking League

Tables by prestigious media houses and Global Advisory Firms, and has received several national and

international honors for our various Businesses including Corporate Finance, Investment Banking, Treasury,

Transaction Banking, and Sustainable practices through Responsible Banking. The Bank has received numerous

recognitions for its world-class IT infrastructure, and payments solutions, as well as excellence in Human Capital.

The sustained growth of YES BANK is based on the key pillars of Growth, Trust, Technology, Human Capital,

Transparency & Responsible Banking. YES BANK has a knowledge driven approach to banking, and a superior

customer experience for its retail, corporate and emerging corporate banking clients. As the Professionals’ Bank

of India, YES BANK has exemplified ‘creating and sharing value’ for all its stakeholders, and has created a

differentiated Banking Paradigm with the vision of ‘Building the Best Quality Bank of the World in India by 2015.

Services Offered

� Corporate Banking

� Corporate & Institutional Banking

� Emerging Corporate Banking

� Government Relationship Management

� Indian Financial Institutions

� International Banking

� Investment Banking

� Corporate Finance

� Financial Markets

� Transaction Banking

� Financial Inclusion Service

� Multinational Corporate & Embassies

� Branch Banking

Under the aegis of Branch Banking, we offer innovative financial products that include:

� Savings Accounts with multiple variants designed to suit an individual’s banking needs

� Current Accounts with innovative & flexible features to suit business requirements, including Trade, Forex &

Cash Management Solutions

� Non-resident Accounts with multiple variants for the Global Indian

� Fixed Deposits offering best in class interest rates.

� Smart Salary Accounts: An innovative Corporate Salary Programme, backed by superior technology that

enables convenience and direct access.

� Retail Banking Loan: A bouquet of products that have been exclusively created exhibiting our high quality

services and faster turnaround time driven by technological platform.

� Knowledge Banking

YES BANK has a knowledge driven approach to banking, and a superior customer experience for its retail,

corporate and emerging corporate banking clients. YES BANK focuses on key sectors such as Food and

Agribusiness, Healthcare, Life Sciences, Media & Entertainment, Telecommunication, IT, Infrastructure and

Retailing amongst others, which are the Future Businesses of India.

� Responsible Banking

Responsible Banking is one of the key differentiators of YES BANK with the objective of developing

innovative business solutions to social and environmental problems. It comprises of three special business

verticals with products aligned to our sustainability strategy, identifying new markets and promoting

sustainable development. YES BANK has successfully established three dedicated business verticals;

� AGRIBUSINESS RURAL & SOCIAL BANKING (ARSB): ARSB develops innovative financial models, which

leverage the outreach of various stakeholders in the agri value chain, to overcome the 'last mile challenges' in

the agri and rural sector. It also works closely with insurance and re-insurance companies to facilitate the

development and distribution of need-based insurance products for the agri-sector. As a Social Banking

initiative, the team provides financial services to the social sector and to socio-economically disadvantaged

sections of society.

� MICROFINANCE: YES BANK is committed to creating equal financial opportunities and enabling financial

inclusion. The Bank provides term lending and direct lending, a two-pronged solution to provide easy access

to suitable financial products and services to un-Banked/under-Banked, low-income communities across

urban and rural India.

� SUSTAINABLE INVESTMENT BANKING (SIB): The Bank has established a dedicated business vertical that

addresses the need for specialist investment advisory in sustainable ventures such as Social, Alternative

Energy and Environment.

� PRIVATE EQUITY (PE): As India fast becomes the most favored emerging market for foreign investments, the

economic, political and regulatory climate for private equity investors has become encouraging.

Strategic Alliances

YES BANK and Export-Import Bank of Malaysia Berhad (EXIM Bank), entered into a Master Facility Agreement

for USD 100 Million bank-to-bank trade finance facility to facilitate ongoing trade finance transactions between

YES BANK and its importing customers.

Financial Highlight

Balance Sheet

(A*- Actual, E* -Estimations & Rs. In Millions)

FY11 FY12 FY13E FY14E

CAPITAL AND LIABILITIES

Capital 3471.47 3529.87 3575.60 3575.60

Reserves and Surplus 34469.28 43236.48 55859.21 71432.29

Deposits 459389.31 491517.05 521008.07 552268.56

Borrowings 66909.09 141564.87 246322.87 389190.14

Other Liabilities and Provisions 25830.72 56772.82 102191.08 167593.36

Total 590069.87 736621.09 928956.83 1184059.95

ASSETS

Cash and Balances with Reserve Bank of India 30760.16 23325.44 24025.20 24745.96

Balances with Banks and Money at Call and Short notice 4199.61 12529.97 22773.38 38347.98

Investments 188288.37 277573.49 385827.15 524724.93

Advances 343636.38 379886.41 425472.78 480784.24

Fixed Assets 1324.29 1771.03 2320.05 3054.08

Other Assets 21861.06 41534.75 68538.27 112402.76

Total 590069.87 736621.09 928956.83 1184059.95

Annual Profit & Loss Statement for the period from 2011 to 2014E

Value(Rs.in.mn) FY11 FY12 FY13E FY 14E

Description 12m 12m 12m 12m

Net Income 40417.40 63073.50 85149.23 106691.98

Other Income 6232.70 8571.20 11485.41 13552.78

Total income 46650.10 71644.70 96634.63 120244.76

Interest Expended -27948.20 -46917.20 -63436.17 -79165.45

Net Interest Income 18701.90 24727.50 33198.46 41079.31

Operating Expenses -6798.10 -9325.30 -13198.13 -16430.56

Operating Profit 11903.80 15402.20 20000.33 24648.75

Provisions and Contingencies -982.10 -902.10 -1300.02 -1577.52

Profit Before Tax 10921.70 14500.10 18700.31 23071.23

Tax -3650.40 -4730.20 -6077.60 -7498.15

Profit After Tax 7271.30 9769.90 12622.71 15573.08

Equity Capital 3471.50 3529.90 3575.60 3575.60

Reserves 34469.30 43236.50 55859.21 71432.29

Face Value (Rs.) 10.00 10.00 10.00 10.00

EPS 20.95 27.68 35.30 43.55

Quarterly Profit & Loss Statement for the period from 30 June 2012 to 31 Mar 2013E

Value(Rs.in.mn) 30-Jun-12 30-Sep-12 31-Dec-12 31-Mar-13E

Description 3m 3m 3m 3m

Net Income 18863.40 19863.70 21336.40 22829.95

Other Income 2881.00 2767.60 3131.90 3570.37

Total income 21744.40 22631.30 24468.30 26400.31

Interest Expended -14141.50 -14622.10 -15493.20 -16780.01

Net Interest Income 7602.90 8009.20 8975.10 9620.30

Operating Expenses -3006.80 -3161.80 -3340.60 -3629.96

Operating Profit 4596.10 4847.40 5634.50 5990.34

Provisions and Contingencies -300.10 -317.30 -566.80 -461.26

Profit Before Tax 4296.00 4530.10 5067.70 5529.08

Tax -1394.60 -1469.30 -1644.60 -1794.19

Profit After Tax 2901.40 3060.80 3423.10 3734.90

Equity Capital 3539.60 3561.10 3575.60 3575.60

Face Value (Rs.) 10.00 10.00 10.00 10.00

EPS 8.20 8.60 9.57 10.45

Ratio Analysis

Particulars FY11 FY12 FY13E FY14E

EPS (Rs.) 20.95 27.68 35.30 43.55

Operating Profit Margin (%) 29.45% 24.42% 23.49% 23.10%

PAT Margin (%) 17.99% 15.49% 14.82% 14.60%

P/E Ratio (x) 19.29 14.60 11.44 9.28

ROE (%) 19.16% 20.89% 21.24% 20.76%

ROCE (%) 0.54% 0.60% 0.67% 0.72%

Book Value (Rs.) 109.29 132.49 166.22 209.78

P/BV (x) 3.70 3.05 2.43 1.93

Charts

Outlook and Conclusion

According to the RBI's 'Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks', September

2011, Nationalized Banks, as a group, accounted for 52.2 per cent of the aggregate deposits, while State Bank of

India (SBI) and its associates accounted for 21.8 per cent.

� At the current market price of Rs.526.00, the stock P/E ratio is at 11.44 x FY13E and 9.28 x FY14E

respectively.

� Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 35.30 and

Rs.43.55 respectively.

� Net Income and PAT of the company are expected to grow at a CAGR of 38% and 29% over 2011 to 2014E

respectively.

� On the basis of Debt-Equity Ratio, the stock trades at 49.18 x for FY13E and 44.81 x for FY14E.

� Price to Book Value of the stock is expected to be at 2.43 x and 1.93 x for FY13E and FY14E respectively.

� We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in

this particular scrip with a target price of Rs. 589.00 for Medium to Long term investment.

Industry Overview

India has a robust banking system, governed by stringent regulations. An intense supervision by the Reserve

Bank of India (RBI) has resulted in stringent regulatory and compliance requirements on capital adequacy & risk

management practices which have strengthened the overall banking system in India.

India’s banking sector includes 86 scheduled commercial banks, 82 regional rural banks, 1,645 urban

cooperative banks (53 scheduled cooperative banks) and 95,765 rural cooperative banks.

Key Statistics

• According to RBI’s ‘Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks’, December

2011, Nationalised Banks, as a group, accounted for 52.1 per cent of the aggregate deposits, while State Bank

of India (SBI) and its associates accounted for 21.9 per cent. The share of New Private Sector Banks, Old

Private Sector Banks, Foreign Banks, and Regional Rural Banks in aggregate deposits was 13.9 per cent, .8

per cent, 4.5 per cent and 2.9 per cent, respectively.

• Nationalised Banks also held the highest share of 51.2 per cent in the total bank credit followed by SBI and its

associates at 22.5 per cent and New Private Sector Banks at 13.8 per cent. Foreign Banks, Old Private Sector

Banks and Regional Rural Banks had shares of around 5.2 per cent, 4.8 per cent and 2.5 per cent, respectively.

• Another statement released by RBI revealed that banks' advances grew 0.1 per cent to US$ 913 billion in July-

September 2012, while deposits expanded by 1 per cent. The RBI projects credit growth at 17 per cent and

deposit growth at 16 per cent in 2012-13.

• Foreign exchange reserves stood at US$ 294.81 billion for the week ended September 28, 2012 wherein the

value of gold reserves was recorded at US$ 28.133 billion and that of foreign currency assets (FCAs) was at

US$ 259.96 billion.

Recent Developments

• Export-Import Bank of India (Exim Bank) has partnered with IL&FS Financial Services (IFIN) to facilitate

accessibility to Indian companies for CNH bond markets as well as other international bond markets which

are not dominated in US Dollar, Euro and Yen. The memorandum of understanding (MoU) gives broad

clauses of co-operation between the two entities on a bond guarantee facility programme which will facilitate

a credit enhancement mechanism to Indian bond issuers in international bond markets.

• Working further on its innovation finance programme for the micro, small and medium enterprises (MSME)

sector, Small Industries Development Bank of India (SIDBI) has entered into a EUR 53 million (US$ 68.53

million) - loan agreement with KFW Germany. SIDBI aims to promote entrepreneurial innovations in MSME

sector, particularly those involved in clean technologies. The scheme also aims to provide financing

instruments specially customised to the needs of the MSMEs.

• India’s second largest private bank HDFC Bank has opened its first representative office in Abu Dhabi to

render financial services to a large customer base of non-resident Indians (NRIs) staying in the UAE. The new

office will help NRIs open accounts in India and will also offer remittance services, fixed deposits and other

related banking services.

• IDBI Bank has received internationally recognised BS 25999 certificate from Intertek India, a global

certification agency. The bank has become India’s first public sector bank to get certified for its business

continuity management (BCM) process, for comprehensive coverage of major business and support

functions. The honor clearly authenticates bank’s dedication towards customer satisfaction, quality of

services, better performance and regulatory compliance.

• The State Bank of Bikaner & Jaipur (SBBJ) has opened a unique and first-of-its kind financial supermarket in

the city. The branch, which will not be a conventional one, will offer a wide range of diversified products and

services. It will primarily aim at cross-selling by offering non-standard products such as insurance (both life

and general), credit card and mutual funds. The supermarket will sell products of its channel partners

namely SBI Life, Mutual Fund, SBI General and SBI Card, both across the counters and through electronic

means.

• India’s third largest private bank – Axis Bank – has entered into a strategic agreement with Tata AIG General

Insurance wherein the latter would be its corporate agent for general insurance. Tata AIG will leverage on

bank’s wide distribution network to offer general insurance solutions to its clients. This initiative by Axis

Bank aimed at broadening insurance cover options while offering Tata AIG’s proclaimed Customer and

Claims service to its' customers across the country.

Government Initiatives

In order to speed up the process of financial inclusion in India, the RBI has announced setting up of a high-level

committee that would ensure accessible financial services in the country.

The Financial Inclusion Advisory Committee, to work under RBI Deputy Governor K C Chakrabarty, would

formulate suitable regulatory framework to align the twin objectives of financial inclusion and financial stability.

The 11-member panel is expected to acknowledge issues such as developing feasible and sustainable banking

services delivery models and devising products and processes for rural as well as urban consumers outside the

banking network.

About 58.7 per cent households are reported to be availing banking facilities, as per 2011 census.

Road Ahead

Indian banking industry is anticipated to grow exponentially and become the world’s third largest in asset size

(projected at US$ 28,500 billion from the current US$ 1,350 billion) by 2025, according to a report by the Boston

Consulting Group (BCG) India, prepared in association with a leading industry organisation and Indian Banks

Associations (IBA). Driven by 3G and smartphones, mobiles would emerge as the most preferred mediums for

banking wherein they will account for almost 20-30 per cent of the transactions.

Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale

of any financial instrument or as an official confirmation of any transaction. The information contained herein is

from publicly available data or other sources believed to be reliable but do not represent that it is accurate or

complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall

not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the

information contained in this report. This document is provide for assistance only and is not intended to be and must

not alone be taken as the basis for an investment decision.

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