Yes Bank share price fell in trading on Thursday after the private sector lender released a business update for the September quarter (Q2). The bank reported a significant year-on-year (y-o-y) increase in both deposits and advances, but noted that the liquidity coverage ratio (LCR) continued to decline, dampening investor sentiment.
Q2 update
In an update, Yes Bank highlighted that total deposits in the September quarter increased by 18.3% year-on-year to reach Rs 2,77,173 crore compared to Rs 2,34,360 crore in the same period last year. However, this was a slightly slower growth compared to the 20.9% year-on-year increase in deposits the bank reported in the June quarter. Deposits then grew by 4.6% compared to the June quarter, a steady but slower pace of growth.
On the advance front, Yes Bank reported a 13.1% year-on-year growth in loans and advances to Rs 2,365,120 crore compared to Rs 2,09,106 crore in the year-ago period. Although this growth was healthy, it was lower than the 14.8% year-on-year increase in advances reported during the June quarter. Subsequently, advances were 3% higher than Rs 2,29,565 crore reported in the June quarter, showing consistent performance but with a slight slowdown in momentum.
Yes Bank also shared an improvement in current and savings account (CASA) deposits, which grew 28.4% year-on-year to Rs 88,559 crore. Subsequently, CASA deposits grew by 8.6% from the June quarter. The CASA ratio, a key indicator for assessing banks’ cost of funds, improved to 32% from 29.4% a year earlier and 30.8% in the June quarter. This improvement reflects Yes Bank’s focus on expanding its low-cost deposit base.
One area of concern is the bank’s liquidity coverage ratio (LCR), which fell to 131.9% in the second quarter from 137.8% in the June quarter. Although LCR was higher than the 120.9% recorded in the same period last year, the continuous decline raised eyebrows among investors. A decline in LCR suggests that a bank’s liquidity buffer is decreasing slightly, which may affect its ability to meet short-term obligations.
The bank’s credit-to-deposit (CD) ratio, another key measure of banking efficiency, stood at 85.3% in the September quarter, down from 86.6% in the June quarter and 89.2% a year earlier. A low CD ratio indicates that a bank is not lending out a portion of its deposits, suggesting that it is cautious with its lending strategy or that its resources are underutilized. Possibly.
Stock price trends
The share price fell by as much as 1.6% to the day’s low of £22.05. While it is 33% off its 52-week high of Rs 32.81 hit in February this year, it has rebounded more than 56% from its 52-week low of Rs 14.10 hit in October last year.
Private bank stock prices have risen more than 30% over the past year, but have remained largely flat, with year-to-date gains of only about 3%. After falling 11% in August, it fell about 5% in September.
Yes Bank’s second quarter results update reflects steady growth in deposits and advances, along with a notable improvement in CASA ratio. However, concerns about the successive decline in liquidity coverage and decline in credit deposit ratio are likely to have contributed to the bank’s stock price decline. While the bank continues to perform well overall, particularly in terms of deposit growth, next steps in addressing liquidity and optimizing resource utilization will be key areas of focus going forward. Dew.
