Why Yes Bank Share Price is Rising

Indian banking stocks are rallying like there's no tomorrow. The Nifty Bank Index recently breached the all-time high of 52,000!

There are several reasons behind the current rally. Banks have reported improved financial performance, with profit on the rise and bad loans or NPAs coming down.

Additionally, the political stability brought on by PM Modi's re-election and the positive outlook for the Indian economy are boosting investor confidence in the banking sector.

Among the standout performers is Yes Bank. It rallied 6.5% in the past five days. Let's explore the specific factors beyond sectoral tailwinds that are boosting Yes Bank's share price.

Quarterly Update

Yes Bank share price gained traction after the company shared its quarterly update for the first quarter.

The bank reported a 0.9% sequential increase in loans and advances to Rs 2.3 trillion (tn) in the April-June 2024 quarter, up from Rs 2.2 tn in the previous quarter. This growth is attributed to an increase in retail and corporate lending as economic activity picked up.

Deposits dipped slightly by 0.5% to Rs 2.6 tn from Rs 2.7 tn in the previous quarter, indicating stable customer confidence. On a YoY basis, loans and advances rose 14.8%, while deposits gained 20.8%, reflecting strong growth in the bank's core business.

The CASA ratio stood at 30.7% in the quarter under review, compared to 30.9% in the previous quarter and 29.4% a year ago. A higher CASA ratio suggests a stable and low-cost deposit base.

The liquidity coverage ratio (LCR) improved to 137.8%, up from 116.1% in the January-March quarter and 127% a year ago, indicating enhanced liquidity management.

The increase in loans and advances, along with a strong deposit base and better liquidity management, has boosted investor confidence.

Additionally, recent regulatory measures and sectoral tailwinds have supported the bank's stock performance, leading to a significant uptick in its share price.

Clarification from Yes Bank

Apart from the healthy quarterly update, Yes Bank shares shot up after the lender issued a clarification.

The bank said that the report on the 51% stake sale is factually incorrect and purely speculative.

A recent media report that was doing rounds suggested that the Reserve Bank of India (RBI) has given its in-principle approval for up to 51% stake purchase by an appropriate incoming promoter for Yes Bank, which is higher than the 26% promoter-holding limit in the usual course of business under banking rules.

While the RBI officials have verbally agreed to the sale proposal, a formal written approval is yet to come. The RBI is still evaluating the suitability of the prospective bidders.

What Next?

After the Q1FY25 business update, market participants look confident in Yes Bank's steady profitability.

The bank's healthy asset quality implies a lower risk of defaults and bad loans, resulting in lower credit costs and improved financial health. Growth in the bank's MSME and corporate loan book shows an expanding lending business, helping maintain a stable net interest margin (NIM).

Yes Bank's balance sheet crossed Rs 4 tn in the Q4 of the previous financial year, driven by growth in SME and mid-corporate advances and a resurgence in the corporate segment. Industry experts are of the view that the business is steadily recovering, with one-offs likely to continue.

Yes Bank's strategic focus on enhancing its digital banking services and customer experience has been well-received, contributing to its growing customer base.

The bank's efforts to improve operational efficiency and reduce non-performing assets (NPAs) have also been recognized as significant positive steps.

How Yes Bank Share Price has Performed Recently

In the past five days, Yes Bank share price has rallied 6%. In the last month, it is up 8%.

In 2024, so far its share price has surged 14.6% and its up 52.2% in the last one year.

The stock touched its 52-week high of Rs 32.8 on 9 February 2024 and a 52-week low of Rs 14.1 on 23 October 2023.

About Yes Bank

Yes Bank is the sixth largest private sector bank in India. It offers services to retail, micro, small, and medium enterprises (MSME) and corporate clients.

The bank has a strong distribution network of 1,198 branches and over 1,345 ATMs in over 300 districts of India. Apart from this, the bank also has three wholly owned subsidiaries - Yes Securities ltd, Yes Asset Management ltd, and Yes Trustee ltd.

For more details about the company, you can have a look at the Yes Bank fact sheet and quarterly results on our website.

You can also compare Yes Bank with its peers:

Yes Bank vs Axis Bank

Yes Bank vs DCB Bank

Yes Bank vs Federal Bank

Yes Bank vs Bank of Baroda

Yes Bank vs ICICI Bank

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy Investing

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...