YES Bank’s net interest income up 37%

Guess which other segments are gaining additional momentum.

According to Maybank, YES Bank’s (YES) Q3 EPS of Rs9.6 surpasses our estimate of Rs9.2. Net interest income was up +37% YoY and +12% QoQ, driven by margin expansion (20bp YoY and 10bp QoQ) and robust loan growth (22% YoY and +4% QoQ).

Here’s more:

Savings account deposits, which grew 307% YoY and 27% QoQ, continue to drive improvement in the bank’s liability mix. Total retail deposits (low cost + term) now comprise 38% of overall deposits (31% in 3QFY12). Margin expansion (interest rate reversal to benefit wholesale‐based banks more) and higher non‐operating income (aided by treasury gains on creditsubstitute portfolio and thrust on retail fee segment) underpin our strong EPS growth estimates of 32% for FY2013 and 34% forFY2014. We value the stock at P/B of 2.8x on FY14F BV and arrive at TP of Rs571 (upside of10%). BUY. Report out today.

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