Why Yes Bank Share Price is Rising

In recent months, the banking sector has been a hot topic of discussion.

This includes not only public sector banks (PSBs) but also several private sector banks that are standing out with impressive retail growth, solid asset quality, and strong financial results.

One such private sector bank that has grabbed investor attention is Yes Bank.

You see, in the last six months, the stock has offered muted and range-bound performance. But now the tables have turned as the bank has rallied around 23% in just one month.

What's the reason this time that's fuelling the sudden surge in Yes Bank's share price?

Let's find out.

#1 Improved Asset Quality

The recent surge in Yes Bank's share price is directly linked to its strong performance in the September 2023 quarter.

Looking at the figures, the bank's total assets grew by 9.2%, reaching Rs 3,652 billion (bn) compared to the same quarter last year.

Total advances also saw an increase of 8.7%, reaching Rs 2,091 bn during the same period.

Yes Bank experienced a remarkable improvement in deposits, a 17.2% year-on-year increase.

The profit after tax (PAT) of the bank witnessed a significant jump of 47.4% to Rs 2.3 bn compared to the same quarter last year.

Turning to asset quality, there was a notable improvement. The gross non-performing assets (GNPA) dropped significantly from 12.9% to 2% YoY. The net non-performing assets (NNPA) decreased from 3.6% to 0.9% YoY.

In short, Yes Bank's stellar financial performance has fuelled the surge in its share price, attracting investor confidence.

#2 Proceeds from the Sale of its NPA Portfolio to JC Flowers ARC

Another significant factor contributing to Yes Bank's recent rally is the infusion of Rs 1.2 bn from the sale of its non performing asset (NPA) portfolio to JC Flowers Asset Reconstruction (JC Flowers ARC).

To understand this better, we need to rewind to December 2022 when Yes Bank was grappling with the challenges posed by bad loans, causing disruptions as companies struggled to meet their repayment obligations.

In response, Yes Bank made a strategic decision to offload these troublesome loans by selling them to JC Flowers ARC for a substantial sum of Rs 480 bn.

As part of this deal, Yes Bank transferred 445 million (m) shares of Dish TV India to JC Flowers ARC. Other entities included in this stressed asset sale comprised Vadraj Cement Ltd., Rosa Power Supply Ltd., Asian Hotels (North) Ltd., and several others.

Now, by selling these loans to JC Flowers ARC, Yes Bank transferred the responsibility of recovering the funds from these companies to JC Flowers ARC. The good news for Yes Bank is that they recently got Rs 1.2 bn as a result of this deal.

This is beneficial for Yes Bank because it helps them get rid of problematic loans and get some money in return, which they can use for other purposes like distributing new loans or strengthening their financial position.

What's Next?

Yes Bank's recent quarterly performance indicates a lot of improvement in their asset quality.

Additionally, credit rating information services of India limited (CRISIL) has upgraded Yes Bank's long-term rating on tier-II and infrastructure bonds to CRISIL A/Positive from CRISIL A-/Positive.

Credit rating from big agencies have some impact on the stock price.

The bank's management is optimistic about expanding its net interest margin (NIM) by 100 basis points over the next three years. This strategy involves attracting more low-cost deposits and extending loans to higher-yield clients.

In terms of customer engagement, Yes Bank has been placing a strong emphasis on improving digital experiences.

As part of this effort, they have introduced user-friendly options for applying for credit cards. This initiative has yielded positive results, with a steady 28% YoY growth in new card acquisitions and an impressive 51% YoY growth in consumer spending.

How Shares of Yes Bank have Performed Recently

Over the past one month, Yes Bank share price has surged by 23%. However, in 2023 so far, the share has eroded investors wealth by 8.5%.

The bank touched its 52-week high of Rs 24.75 on 14 December 2022 and its 52-week low of Rs 14.10 on 23 October 2023.

Domestic Institutional Investors (DIIs) have increased their stake in Yes Bank by 3% on a quarter on quarter (QoQ) basis.

As of the September quarter in 2023, DII now account for 40.68% of the company's stake, a notable increase from the 37.72% stake they held during the June 2023 quarter.

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

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