Yes Bank Share price today: Yes Bank reported standstill and SMA2 numbers which are in line with previous expectations of 6% slippages and 5% restructuring to fully account for the legacy and covid related stress. However, in addition to this, Yes Bank reported SMA1 of 5.7% (excl restructuring including above) which is inline with the system average and similar to peer banks (3-5% range). Yes Bank share price closed yesterday at Rs 16.25, down Rs 0.10 or 0.6%.

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Sumeet Bagadia, Executive Director, Research at Choice Broking said that Yes Bank stock has been trading in a Triangle Formation and recently the stock has faced strong resistance of its Upper Band of the formation which indicates weakness in the counter and may fall upto the level of lower band of the formation. Yes Bank daily momentum indicator RSI reading is at 30 with a negative crossover which points out for a negative breadth in the counter. 

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Investec believes that Yes Bank’s CET1 should remain above 12% even if the entire stress were to be absorbed over the next 5 quarters. Liabilities continue to improve continuously with CD ratio now at 116% and deposit growth strong at 7.7% QoQ. While Yes Bank balance sheet remains stable, profitability will take time to improve as we continue to build higher credit costs due to economic uncertainty.

Yes Bank has also disclosed an additional 5.7% of book as SMA1 which is in line with the pre-covid level and likely to be in line with peer bank average as per our expectations. Nevertheless, the economic uncertainty forces us to build elevated credit costs of 3% to factor the uncertainty created by SMA1 book.

Given the uncertain economic conditions, Investec built elevated slippages and credit costs even for FY22e to absorb this stress in Yes Bank. Operational performance both on operating profitability and deposits mobilization remain strong, while the positive “one-offs” of recoveries & treasury income are higher than negative “one-offs” of interest reversals. Investec reduced the target price to Rs19 (from Rs20) and retain Hold rating on Yes Bank.