Why brokerages are bullish on Yes Bank

Yes Bank saw a 34 percent year on year increase in net profit to Rs 290 crore in the first quarter. This was primarily due to the whopping increase of 74 percent in other income. The healthy growth in non-interest income was largely due to financial advisory, transaction banking, financial markets and retail banking fees.

The interest income, or the difference between interest earned and interest expended, grew 33.3 percent to Rs 472 crore. Net interest margin remained stable at 2.8 percent.However the management expected the NIM to improve as a result of the improving CASA base.

Asset quality of the bank deteriorated a tad with both gross and net non-performing asset ratios increasing marginally.

Views of some of the brokers on the performance of the Yes Bank stock are:

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Nirmal Bang has a HOLD rating on Yes Bank with a target price of Rs 401. The operating expenses have gone up due to the opening up of 25 new branches and approximately 540 employees. Despite this hike the cost to income ratio remains fairly stable. The bank also has plans to expand in the retail and SME (Small and medium Enterprises) segment. The CASA (Current Account and Saving Account) deposits continued with the upward trend.

[caption id=“attachment_392350” align=“alignleft” width=“380”]  The operating expenses have gone up due to the opening up of 25 new branches.[/caption]

Prabhudas Lilladher said the increase in Net Interest Income was in line with expectation. Profits performed better than expected due to surprise increase in treasury income. Though the loan growth was muted at 16 percent, the increase in Net Interest Income made up for it by significant increase of 282.4 percent.

Religare maintained a buy call on Yes Bank with a target price of Rs 425. As per the Religare report advances grew by 1.4 percent quarter on quarter mainly due to the loans given to corporates.

The current market price of Yes Bank is Rs 346.76. The share price increased by 4.24 percent annually, in comparison to the decline of 10.71 percent by the Sensex benchmark index.