Yes Bank Surges By 8%, Market Expects Improved Asset Quality

In early trading today, shares of Yes Bank surged over 8% following analysts reaffirming their positive outlook for the private sector lender. This momentum pushed Yes Bank’s shares to reach around Rs.27.08, with its market capitalization rising to Rs.81,665 crore.

Analysts Affirm Positive Outlook

Analysts affirmed Yes Bank’s long-term foreign currency and local currency deposit ratings, emphasizing improvements in the bank’s depositor base, lending franchise, asset quality, and capitalization over recent years. It was also noted that Yes Bank’s asset quality has improved, with non-performing loan (NPL) ratios declining to 4.5% from 5.7%.

Financial Performance 

Yes Bank’s stock opened 4.1% higher at Rs.26.01 today, rebounding from the previous session’s close at Rs.24.97. The bank’s shares had touched a 52-week high of Rs.32.81 in February 2024 and a low of Rs.14.10 in October 2023. Over the past year, Yes Bank shares have gained 52%, reflecting renewed confidence in its turnaround strategy.

Interest and Denials

Recent reports indicated interest in Yes Bank, with potential stake acquisitions by First Abu Dhabi Bank and Japanese financial giants. However, First Abu Dhabi Bank denied any current evaluation for a stake purchase. Yes Bank also refuted reports claiming RBI approval for a 51% stake sale, dismissing them as speculative. Despite these denials, market analysts speculate that such interest brings out Yes Bank’s potential in the Indian banking sector.

Analyst Insights & Outlook

Analysts expect Yes Bank’s core profitability to improve gradually, driven by improvements in its lending practices and depositor relations. The bank’s focus on higher-yielding segments like retail and SMEs is anticipated to boost net interest margins, despite challenges in profitability compared to peers. Projections suggest the bank’s pre-provisioning operating profitability could increase to above 1.2% over the next 12-18 months, up from 0.8% in FY24.

Conclusion: Yes Bank’s 8% jump in share price shows it’s gaining momentum, backed by analysts’ positive views on better assets and strategies. With shares up 52% in a year and market cap hitting Rs.81,665 crore, it’s rebuilding investor confidence. As it strengthens financially, its growth will be closely watched.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.