7 April 2017
Update
| Sector:
Financials
Yes Bank
Buy
BSE SENSEX
29,707
S&P CNX
9,198
CMP: INR1,565
TP: INR2,110 (+35%)
Re-rating led by diversification and balance sheet granularity
Robust capitalization | 2x+ system growth | Best-in-class return ratios
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
12M Avg Val (INR M)
Free float (%)
YES IN
453.8
1570 / 827
5/16/66
704.8
10.3
3855
78.2
Financials Snapshot (INR b)
Y/E March
2017E 2018E 2019E
NII
58.6
76.3
96.3
OP
56.3
73.3
92.2
NP
33.3
43.4
54.6
NIM (%)
3.6
3.8
3.8
EPS (INR)
73.5
95.7 120.3
EPS Gr. (%)
21.6
30.3
25.7
BV/Sh. (INR)
469.3 545.5 641.2
ABV/Sh. (INR)
463.6 539.3 632.1
RoE (%)
19.0
18.9
20.3
RoA (%)
1.8
1.9
2.0
P/E(X)
21.3
16.4
13.0
P/BV (X)
3.3
2.9
2.4
Shareholding pattern (%)
As On
Dec-16 Sep-16 Dec-15
Promoter
21.8
21.9
22.0
DII
23.8
23.1
23.6
FII
42.0
42.6
41.4
Others
12.4
12.4
13.1
FII Includes depository receipts
Stock Performance (1-year)
Yes Bank
Sensex - Rebased
1,600
1,350
1,100
850
600
The recent capital raise of INR49b (30% of December 2016 net worth) has added
~300bp to Yes Bank’s (YES) CET1 ratio (~13%). With an incremental market share of
3.5%+, aggressive roll-out of retail/SME products and strong corporate relationships,
YES is expected to register loan CAGR (FY17-20) of 28% – at least 2x of system loan
growth.
YES has increased its branch strength at a 32% CAGR and SA deposits at a 90% CAGR
over FY11-16. The CASA ratio increased from just 11% in FY11 to 33% in 9MFY17. The
2020 CASA target of 40% could be achieved a year in advance, led by YES’ strong
branch expansion plans (2.5x in three years) and roll out of a complete product suite
for corporate/retail customers.
YES has maintained pristine asset quality (GNPLs less than 1%) in a challenging
environment, despite clocking strong loan growth. This speaks well for its credit
appraisal systems, given that the bank has achieved loan/PAT CAGR of 23/28% over
FY11-16.
Robust loan growth, NIM expansion (~20bp led by higher CASA and share of retail
loans) and rising fee income contribution are expected to drive a 27% PAT CAGR
through FY20. This will see RoA improving to ~2% (v/s 1.8% currently) and RoE being
maintained at 20%+.
YES is available at ~30% discount to private banks like HDFCB, IIB and KMB. Robust
BV CAGR of 23% (highest in the system), superior RoEs, strong asset quality and
increased balance sheet granularity (higher share of retail loans + CASA roll out)
should drive a re-rating, in our view. We expect YES to bridge the valuation gap v/s
peers, and thus, reiterate Buy with a target price of INR2,110 (3.3x FY19 BV).
Poised to leverage on investments in franchise, people and technology
YES’ strategy of targeting cash-rich regions (45% of branches concentrated in ~20
districts accounting for 56% of India’s deposit market share) has yielded rich
dividends, with 90% SA deposit CAGR over FY11-16. Continued strong branch
expansion plans (2.5x increase to 2,500 by FY20), increasing ‘feet on street’ and a
more complete product offering are expected to create higher presence and brand
visibility, enabling the bank to fast-track on its retail promise. We believe the CASA
target of 40% could even be achieved by 2019 (v/s its stated objective of 2020).
Full steam ahead on retail – the only missing piece
YES is expected to transform from a largely corporate lending bank to a well-
diversified private sector bank over next five years, with the proportion of branch
banking and retail assets increasing to 45% by FY20 from 31% currently.
Technological differentiation and ability to raise its cross-sell capabilities will be the
key catalysts. With incremental market share of 3.5%+, low-hanging fruits in
retail/SME business and strong corporate relationships, we expect YES to register
28% loan CAGR over FY17-20.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com); +91 22 6129 1526
Subham Banka
(Subham.Banka@MotilalOswal.com); +91 022 6129 1567

Yes Bank
Core PPoP CAGR of ~30% - Best-in-class
Corporate yields are under pressure owing to increasing competitive intensity due
to excess liquidity in the banking system and deepening of bond markets. However,
significant benefit on cost of funds (due to decline in bulk rates and strong CASA
flows), coupled with higher-yielding products (like credit cards and personal loans),
will help YES maintain/improve its near-term margins. Reduction in SA rates (~200bp
differential v/s large banks) by 50bp should help to improve margins by ~10bp and
earnings by ~3%. We factor in ~25bp NIM improvement by FY20E, driving NII CAGR
of 27% over FY17-20E. Corporate fees may come under pressure, but we expect a
sharp pick-up in retail fees led by addition of new value-add products.
Net stress loans one of the lowest in banking system
Structured transactions, adequate collaterals and out of consortium arrangements
have enabled YES to maintain pristine asset quality (GNPA ~85bp, NNPA ~30bp). The
bank has very small amount in OSRL (42bp), SDR (17bp) and 5:25 (9bp), which
provides comfort. Nevertheless, we conservatively factor in credit cost of 65bp, as
against average of 29bp over FY08-16 (the worst phase in terms of asset quality for
the Indian banking system) and 57bp in FY16.
Superior RoE maintained across cycles
YES’ has delivered sustainable RoE of 20%+ despite frequent capital raises. Healthy
NIMs, high contribution of fee income, opex control and pristine asset quality have
been the drivers of its superior performance. Post the recent capital raise of INR49b,
YES’ capitalization is one of the best in the system (CET1 ~13.1%). Our calculations
suggest that despite capital raise, RoE will remain strong at 19-20% over FY18-20.
Transformed balance sheet and strong capitalization to drive market share
gains – re-rating to continue
Core PPoP CAGR is expected to be robust at ~29%, driven by NIM expansion and
strong loan growth. Healthy asset quality and controlled credit costs will allow YES
to deliver ~27% PAT CAGR over FY17-20. We are confident in YES’ ability to generate
retail assets (45% by FY20), which will bridge the valuation gap v/s larger retail
banks. Re-rating will be driven by a) strongest BV CAGR of 23% v/s 15-16% for
HDFC/IIB/KMB, b) pristine asset quality trends, c) increased granularity in the
balance sheet and d) superior RoE of 20%+. YES has been a standout performer over
past three years with 3.7x returns, and we expect the outperformance to continue.
Return ratios will remain best in the system, with RoA of ~2% and RoE of 20%. Based
on residual income model, we raise our price target to IN2,110 (3.3x FY19 BV).
Reiterate
Buy.
7 April 2017
2

Yes Bank
Building blocks in place
Retail assets to gain momentum driven by a strengthened liability franchise
We believe the building blocks are in place to accelerate growth in retail: a) strong
capacity in terms of branches (964 v/s 214 in FY11), people (19,400 v/s 3,929 in FY11)
and technology, b) a complete product suite (introduction of credit cards, etc.) and c)
leveraging on an improving liability franchise (40% CASA ratio target by FY20).
YES has grown its branch network at a 32% CAGR and SA deposits at a 90% CAGR over
FY11-16. Continued branch expansion (2.5x increase in three years) and a complete
product suite may allow the bank to achieve its CASA target of 40% by FY19 itself.
With incremental market share of 3.5%+, low hanging fruits in retail and SME, and
strong corporate relationships, we expect ~28% loan CAGR through FY20.
Building retail assets – the missing piece in the puzzle
While YES has done well on the liability side, it is lagging behind on the pure
retail asset side (consumer banking accounts for just 8.6% of loans).
YES has a 3-pronged strategy to generate retail assets – a) increasing its “feet on
street” employees, b) mining and cross selling to existing liability franchise, and
c) introducing the complete suite of retail/SME products for its customers. Given
the severe under penetration across its products; we believe retail asset
generation will not be a challenge for YES. Over next 3-5 years, YES targets to
raise the proportion of own retail loans to 20-22% from ~9% in 2HFY17.
The bank aims to use the supply chain approach to gain traction in SME
business. The bank is likely to focus on retailers and distributors for growing this
segment. This will help YES in higher cross-sell and CA deposit accretion. By
leveraging on strong corporate relationships, YES is expected to target the
supply chain of these companies, providing further fillip to growth.
By FY20, management expects the loan book mix to broadly be consumer/micro
& small and business banking (45%) and corporate banking (55%). This implies
very strong growth in these segments, given that the corporate loan portfolio is
also expected to grow in the northward of 20%. Successful retail execution could
lead to dramatic improvement in its business proposition and profitability.
Exhibit 1: Incremental market share of 3.5%+
MS
Incremental MS
3.7
4.1
3.2
1.8
3.7
2.0
3.6
2.2
3.7
2.1
0.9
0.3
FY07
0.4
0.7
0.7
0.7
0.9
1.7
0.8
0.5
0.9
1.4
0.4
0.9
1.2
1.2
1.4
1.6
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
FY19E
FY20E
Source: MOSL, Company
7 April 2017
3

Yes Bank
Exhibit 2: FY11 - Significantly low retail
loans
Branch
Banking, 15
Micro and
small,
9
Consumer,
5
Exhibit 3: 9MFY17 Retail banking
gaining pace
Branch
Banking, 11
Consumer,
9
Exhibit 4: Expect transformed business
model by FY20
Consumer,
22
Corporate,
55
FY11
Micro and
small, 12
Corporate,
71
9MFY17
Corporate,
69
Source: MOSL, Company
Branch and
MSME , 23
FY20
Source: MOSL, Company
Source: MOSL, Company
Onboarding of best-in-class talent and digital initiatives to ramp up
customer acquisition
YES has invested significantly toward digitalization and technology and has also
tied up with several e-commerce and fin-tech companies.
The bank has sourced talent (senior management) from leading private/foreign
banks to scale up its retail business and increase overall balance sheet
granularity. The focus has been to mine the existing liability customer base to
build its retail assets.
The bank has ramped up customer acquisition SA customers, with run-rate per
quarter of ~80k (8% of customer base; v/s ~15-20k in CY11, implying 42% CAGR;
number of debit card used as proxy for SA customers).
The current deposit base should expand, driven by strong traction in client
acquisition in the CMS segment. SA deposits should grow with expanding reach,
focus on the salaried segment and differentiated SA deposit rates.
Continued branch expansion and utilization to propel growth in CASA
We find strong correlation between number of branches and the SA ratio of the
bank (Exhibit 3). Led by a focused approach to target cash rich regions (Exhibit
2), YES has done exceedingly well to prop up its retail term-deposits (26% v/s
13% in FY11) and mobilize SA deposits (SA ratio at ~22% v/s merely 2% in FY11).
We believe the bank’s objective of ~40% CASA ratio by FY20 is achievable given
the a) under-utilization of existing branches (customer/branch of 1,593 v/s
private bank average of 5,134) and b) the continued pace of branch expansion
(2.5x increase in branch strength to 2500).
Significant underutilization of existing branches (number of debit cards/branch
at 1,593 v/s 5000+ for HDFCB/ICICIBC/AXSB and 3000+ for IIB/KMB) and focus
on large wallet customers (average SA balance/debit card of 0.2m more than 2x
of PVBs) are key catalysts for CASA mobilization. CASA ratio target of 40% could
even be achieved in FY19 itself, v/s target of FY20.
7 April 2017
4

Yes Bank
Exhibit 5: FY11 - High dependence on
wholesale deposits
CASA 10
Retail FD
13
Exhibit 6: 9MFY17 - Strong traction in
CASA– up more than 3x in 5 years
Wholesale
41
CASA 33
Exhibit 7: FY20 - strengthened liability
franchise
-
CASA ratio ~40%
Wholesale
30
CASA 40
FY11
Wholesale
76
Source: Company, MOSL
9MFY17
Retail FD
30
FY20
Retail FD
26
Source: Company, MOSL
Source: Company, MOSL
Exhibit 8: CASA ratio has moved from 11% to 33%, with SA ratio improving ~11x
SA (%)
CA (%)
11
11
11
11
10
0
5
1
7
1
8
1
9
1
9
2
10
5
10
9
9
13
9
14
10
18
23
26
28
30
Source: MOSL, Company
Exhibit 9: Bridging gap in CASA franchise – CASA ratio to match that of larger peers
YES
AXSB
53
41
45
27
10
32
33
HDFCB
ICICIBC
IIB
KMB
42
48 45 50
37
40
49
42
44
39
41
FY11
9MFY17
FY20
Source: MOSL, Company
7 April 2017
5

Yes Bank
Exhibit 10: Branch market share among private banks up 2x to 8.2%; branch contribution of 45% v/s 23% for private banks
YES No. of branches
1HFY12
New Delhi
Gurgaon
Pune
Mumbai Suburban
Bangalore Urban
Ahmedabad
Thane
Alwar
Jhajjar
Mumbai
Kolhapur
Chhindwara
Chennai
Jalandhar
Ludhiana
Hyderabad
Nasik
Raigad
Rohtak
Sahibzada Ajit Singh Nagar
Top 20 districts
Branches
% of top 20 districts in overall
30
12
5
16
3
4
13
6
3
9
1
0
4
3
3
3
4
2
0
8
129
305
42.3
1HFY17
82
39
35
33
26
19
18
17
17
17
16
15
14
13
13
12
11
11
11
11
430
950
45.3
Pvt.
1HFY12
4.6
10.6
2.5
4.1
0.8
2.6
5.7
14.0
25.0
4.3
1.1
0.0
1.2
3.7
3.2
1.4
6.1
6.1
0.0
13.6
3.8
2.2
24.7
Branch market share
Pvt.
Overall
1HFY17
1HFY12
8.8
1.2
14.9
3.0
9.2
0.5
7.2
1.3
3.9
0.2
6.7
0.5
6.1
1.8
24.6
2.2
44.7
2.9
6.5
1.0
10.3
0.3
68.2
0.0
3.2
0.3
9.2
0.5
7.2
0.5
4.1
0.3
7.8
1.1
13.6
0.8
27.5
0.0
10.4
3.3
8.2
0.9
4.1
0.3
22.8
14.7
Loan MS Deposit MS Savings MS
Overall
1HFY17
2.5
5.9
2.5
2.4
1.1
1.6
1.9
4.5
10.8
1.7
3.7
8.7
1.0
1.8
1.6
1.0
1.9
2.6
5.4
2.8
2.3
0.7
14.2
10.4
1.0
2.0
5.0
4.7
1.5
1.3
0.1
0.1
10.4
0.2
0.1
2.7
0.5
0.5
2.3
0.3
0.3
0.1
0.2
43.7
12.3
0.6
1.9
8.5
4.1
2.3
0.6
0.1
0.1
15.5
0.2
0.0
4.5
0.2
0.8
3.5
0.3
0.2
0.1
0.2
56.0
6.2
1.0
1.7
3.0
3.6
1.2
1.3
0.2
0.1
2.4
0.2
0.1
2.1
0.5
0.6
1.9
0.4
0.3
0.2
0.2
27.3
Source: Company, MOSL
Exhibit 11: Branch expansion highly correlated with SA growth
Branch gr FY06-11
SA gr FY06-11
Branch gr FY11-16
SA gr FY11-16
138
66
10
Kotak
28
17
33 27 41
90
32
YES
33 26
12 15
25
38
16 21
30 31
47
18 18
13
ICICIBC
AXSB
HDFCB
IIB
Source: MOSL, Company
Exhibit 12: Branch network up over 5x over past 5 years; to increase 2x in the next 3 years
Branches
30% CAGR
65% CAGR
17
40
67
117
150
214
356
32% CAGR
430
560
630
860
964
2,500
Source: MOSL, Company
7 April 2017
6

Yes Bank
Exhibit 13: Debit card/branch lowest amongst peers –
indicates significant under-utilization
8055
5970
Exhibit 14: SA balance/debit card (proxy for customer base)
higher than peers – focus on affluent customer base
0.19
5110
3475
3059
0.08
0.08
0.08
1593
ICICIBC
AXSB
HDFCB
Kotak
IIB
YES
YES
0.06
0.05
Kotak
HDFCB
IIB
AXSB
ICICIBC
Source: MOSL, Company
Source: MOSL, Company
Exhibit 15: Launched complete suite of liability products
Source: Company, MOSL
7 April 2017
7

Yes Bank
Exhibit 16: Offering complete suite of products to retail customers
Source: Company, MOSL
7 April 2017
8

Yes Bank
Core earnings growth to be amongst best in the system
Robust growth and improving NIMs supported by pristine asset quality
While yields are expected to remain under pressure due to excess liquidity and higher
dependence on credit substitutes, YES has several levers to improve margins: a)
pockets of opportunity in retail loans (high value add products like credit cards and
personal loans), b) opportunity in SME and corporate business vacated by PSBs (cross
subsidies owing to bargaining strength) and c) bandwidth to reduce SA interest rate.
CASA roll out and falling bulk rates should lead to fall in cost of funds. Favorable ALM
profile will also help margins. In the <1 year bucket, more liabilities (63%) are maturing
than loans (38%), which augurs well for YES in an environment of easing interest rates.
Coupled with 25% loan growth CAGR, YES is one of the few banks that will report
strong NII growth in the ensuing quarters - 26%+ in FY18/19.
Exhibit 17: Customer asset mix shifts in favor of better-yielding loans (%)
Loans
Credit subsitutes
9
9
8
10 11 16 18 18
12 10 10 9
22 22 21 22 22 22 21 20 17 14 15 13
90 89 84 82 82
88 90 90 91 91 91 92
78 78 79 78 78 78 79 80 83 86 85 87
Source: Company, MOSL
Exhibit 18: Stable to improving spreads led by sustained
improvement in liability franchise… (%)
Yield on int. earning assets
Cost of Int. bearing liabilities
10.5 10.5 10.6 10.6
9.3
10.0 10.1
9.7
Exhibit 19: …leading to NIMs gradually trending upwards
overtime (%) – to achieve highest levels in the next 3 years
9.3
9.2
3.3
2.6
2.9 3.0 2.9
2.7
2.8 2.9
3.2
3.4
3.6
3.8 3.8 3.8
2.3
8.1
6.6
8.0
7.9
7.6
6.9
6.8
6.2
5.8
5.7
Source: Company, MOSL
Source: Company, MOSL
7 April 2017
9

Yes Bank
Exhibit 20: ALM in favor of declining interest rate (%)
Deposits
63
47
32
38
26
9
<1 Year
1 to 3 yrs
21
36
14
28
27
1.4
1.6
Borrowings
Advances
Investments
60
Exhibit 21: Average duration of assets higher than liabilities
3.1
Liabilities
Assets
2.5
1.8
2.5
> 3 yrs
Source: Company, MOSL
FY14
FY15
FY16
Source: Company, MOSL
YES is currently still in investment phase, and hence, we feel the gap between
opex (cost to average assets at ~2.2-2.3% in FY18/19) and fee income (1-8-19%
of assets) is expected to remain wide.
While opex CAGR is expected over remain high over FY17-20E (24% CAGR), scale
efficiencies and productivity gains should see the bank deriving some operating
leverage benefits over the medium to long term.
Exhibit 23: Gap between non-interest income and opex to
remain high led by high investment phase (%)
Core Fee Income/Average Assets
3.6
3.0
Forex, debt
capital and
Securities
26
2.3
1.7
1.0
Opex/Average Assets
Exhibit 22: Fee income has diversified over the years
(average of trailing four quarters)
Interchange General
Banking 4
5
Third party
3
Processing
fees 2
Trade and
Remittance
7
Corporate
39
Source: Company, MOSL
Corporate
and CMS 13
Source: Company, MOSL
Stress loans lowest amongst corporate lenders
YES has maintained impeccable asset quality with net stress loans contained at
120bp. The bank has also maintained contingency provision of 30-50bp over
past few years to provide cushion against any uncertain event.
While the bank has exposure to stressed corporate groups, these loans are
usually part of structured transactions, adequately collateralized and out of
consortium arrangements.
We expect healthy asset quality trends to continue, but still conservatively
factor in credit cost of 65bp v/s average of 29bp over FY08-16 and 57bp in FY16.
7 April 2017
10

Yes Bank
Exhibit 24: Asset quality maintained throughout the cycle
GNPA (%)
NNPA (%)
Source: Company, MOSL
Exhibit 25: Stress addition remains under check…(%)
Slippage Ratio
Net slippage Ratio
0.9 0.9
0.9
0.5
0.2 0.2
0.1
0.1
0.3 0.3 0.3
0.6
0.8
1.2
1.0
0.7
0.9
1.2
1.3 1.3
Exhibit 26: …with slippage ratio consistently lower than
peers (%)
YES
IIB
HDFCB
ICICIBC
AXSB
3.6
3.4
2.2
0.7 0.8
0.9 0.9
0.7
1.3
1.6
1.6
1.7
1.2
1.3
0.2
FY10-16 average slippage ratio
Source: Company, MOSL
FY17-20 average slippage ratio
Source: Company, MOSL
Exhibit 27: Credit costs contained while maintaining healthy
PCR (%)
Credit costs
92.6
52.3
78.4
88.6
50.6
79.2
51.5
20.0
3.1
34.2
26.5
85.1
PCR
65.0 65.0 65.0
66.1 69.1
67.0
Exhibit 28: Conservatively building higher credit costs, but
still lower than peers (bp)
KMB
HDFCB
YES
IIB
AXSB
ICICIBC
186
106
36
60 63 70
208
57.3 55.0
72.0
62.0 65.9
65
12.7
3.2
19.8
81
29
88
60
FY10-16 average credit cost FY17-20 average credit cost
Source: Company, MOSL
Source: Company, MOSL
7 April 2017
11

Yes Bank
Exhibit 29: Net stress loans significantly lower than corporate lenders
10.6
6.9
0.4
HDFCB
1.0
IIB
1.2
KMB
1.2
YES
ICICIBC
AXSB
Source: Company, MOSL
Exhibit 30: Capital allocation evidenced by 1.5/20%+ RoA/RoE generated on a consistent basis, despite regular capital raises
INR3.15b
through IPO
1.9
1.2
1.4
1.5
1.6
1.5
1.5
1.5
1.6
1.6
USD225m
through QIP
RoE
RoA
USD 500m
through QIP
1.7
13.3
FY06
13.9
FY07
19.0
FY08
20.6
FY09
20.3
FY10
21.1
FY11
23.1
FY12
24.8
FY13
25.0
FY14
21.3
FY15
19.9
FY16
Source: Company, MOSL
Exhibit 31: RoEs have remained superior compared to peers despite capital raising (%)
YES
30
25
20
15
10
5
HDFCB
ICICIBC
AXSB
IIB
KMB
Source: Company, MOSL
7 April 2017
12

Yes Bank
Granular balance sheet to bridge valuation gap v/s peers
Re-rating driven by superior ratios and outperformance
YES has maintained superior RoEs of 20%+ v/s ~19/16/14% for HDFCB/IIB/KMB. The
bank has registered EPS CAGR of 27% over FY10-16, translating into BV compounding
of 24% during the same period.
The bank has maintained GNPLs less than ~1% in a challenging environment, despite
clocking 23%+ loan growth over FY11-16. We believe YES’ risk management and credit
appraisal processes are among the best in the industry.
At 2.4x FY19E P/BV, YES is available at ~30% discount to larger retail banks like HDFCB,
IIB and KMB (trading at 3x FY19 BV). We are confident in the bank’s ability to scale up
the share of retail in the overall loan mix to 45% by FY20 v/s 32% currently, led by a)
continued branch expansion (2.5x increase to 2,500 by FY20), b) strengthening liability
franchise (CASA ratio ~40% by FY20) and c) a complete suite of retail products.
Granular asset mix will help the bank to bridge the valuation gap.
Robust loan growth, expanding NIMs and rising fee income contribution should lead to
~29% core PPoP CAGR through FY20. The bank is expected to register EPS CAGR of 27%
– one of the best in the system. Owing to its superior return ratios, BV CAGR will be
the highest in the system at 23% v/s 15-16% for HDFCB/IIB/KMB.
We believe YES will command premium valuation, led by a) highest BV compounding
in the system, b) strong asset quality trends, c) higher granularity on both sides of the
balance sheet and d) superior RoE of 20%+.
YES has been a standout performer over past three years with 3.7x returns, and we
expect the outperformance to continue. Return ratios will remain the best in the
system, with RoA of ~2% and RoE of 20%. Based on residual income model, we raise
our price target to IN2,110 (3.3x FY19 BV). Reiterate Buy.
Exhibit 32: EPS CAGR has outpaced peers between FY10-16, growth momentum to
continue through FY16-19
ICICIB
AXSB
HDFCB
IIB
YES
KMB
29
25
15
19
29
27
12
15
19
22
26
10
FY10-16 EPS CAGR
FY16-20EPS CAGR
Source: Company, MOSL
7 April 2017
13

Yes Bank
Exhibit 33: BV compounding to be highest in the system led by superior RoE and strong
growth
ICICIB
AXSB
33
18
11
21
23
24
9
12
16
16
15
23
KMB
HDFCB
IIB
YES
FY10-16 BV CAGR
FY16-20 BV CAGR
Source: Company, MOSL
Exhibit 34: Strongest capital allocation among peers
21.0
17.0
13.0
ICICIBC
9.0
5.0
0.8
1.3
AXSB
1.8
2.3
2.8
3.3
Exhibit 35: We believe YES will bridge the gap soon
HDFCB
23.0
19.0
15.0
KMB
11.0
7.0
0.8
ICICIBC
1.3
AXSB
1.8
2.3
2.8
3.3
YES
IIB
YES
HDFCB
IIB
KMB
FY19E P/BV
Source: Company, MOSL
FY19E P/BV
Source: Company, MOSL
Exhibit 36: 5 year price performance – YES and IIB have
outperformed peers
450
350
250
150
50
AXSB
ICICIBC
KMB
HDFCB
IIB
YES
431
412
315
276
220
155
Exhibit 37: 3 year price performance – YES has been the
standout performer in a challenging environment
450
350
250
150
50
AXSB
ICICIBC
KMB
HDFCB
IIB
YES
366
276
220
192
173
110
Source: Company, MOSL
Source: Company, MOSL
7 April 2017
14

Yes Bank
Exhibit 38: Market CAP has grown 42x since inception; YES has given 42% price CAGR since the previous capital raise
Price (INR)
INR3.15b
through IPO
Market Cap (INRb)
USD225m
through QIP
USD 500m
through QIP
42% CAGR
38% CAGR
14% CAGR
Source: MOSL, Company
Exhibit 39: YES – Management Team
Name
Rana Kapoor
Amit Kumar
Ashish Agarwal
Chitra Pandeya
Nirav Dalal
Pralay Mondal
Rajat Monga
Sanjay Palve
Designation
Founder/ Managing Director & CEO
Group President and Country Head –
Corporate and Commercial Banking
Group President and Chief Risk Officer
Sr. President & Country Head –
SA Liabilities Mgmt., Cards & Direct Banking
Sr. President & Managing Director –Financial Markets
Senior Group President –
Branch, Retail & Business Banking
Sr. Group President –
Financial Markets & Chief Financial Officer
Sr. Group President and
Sr. Managing Director –Wholesale Banking
Previous assignment
Managing Partner / CEO & Managing Director -Rabo India, Bank
of America (16 years)
ANZ Capital Pvt. Ltd.
Executive Director –Lehmann Brothers
Head of Liabilities & Payments Products & Retail Banking –HDFC
Bank
Structured Finance Group –IDBI Bank
Head-Retail Assets, Credit cards, Outbound Contact, Merchant
Establishment ,HDFC Bank
Head of Treasury -Rabo India
Chief Manager, Project Financing Group –ICICI Bank
Source: MOSL, Company
Exhibit 40: YES – Branch and Retail Banking Team
Name
Pralay Mondal
Sumit Gupta
Designation
Senior Group President – Branch & Retail Banking
Previous Assignment
Head-Retail Assets, Credit cards, Outbound Contact, Merchant
Establishment, HDFC Bank
Associate Director with Rabo India (sub of Rabobank,
Netherlands)
Managing strategic initiatives at Rabo India Finance,
Corporate Planning team of Bennett Coleman & Co Ltd.
Head-Premier Banking, Current Account,
Retail Trade and Forex and Bill Pay Products, HDFC Bank
Regional Director -CyberSource - India & South Asia, Visa
Consolidated Support Service (I ) Pvt. Ltd.
Business Head – Secured Loans & Rural Sales, HDFC Bank
General Manager – Head Retail Risk (Credit underwriting, Fraud
Controls, Risk and Business Analytics, Credit Policies and Debt
Service management), ICICI Bank
Global Head – Banking Services operations, Sutherland Global
Services
Head- Emerging Enterprises Group, Axis Bank
Source: MOSL, Company
Group President and National Head,
Business & Rural Banking (BBRB)
Nikhil Sahni
Group President, Government Banking
and National Head, Branch Banking
Ratan
Senior President and Country
Kumar Kesh
Head - Service Delivery
Rajanish Prabhu Senior President and Head - Credit Cards
Rajan Pental
Neeraj Dhawan
Group Head Retail Lending
Group President &
Chief Risk Officer - Retail & Business Banking
Kumar
Chief Operating Officer and
Padmanabhan
Senior Group President
Bhadresh Pathak Senior President and Head - Business Banking
7 April 2017
15

Yes Bank
Financials and Valuations
Income Statement
Y/E March
Net Interest Income
Change (%)
Non Interest Income
Net Income
Change (%)
Operating Expenses
Pre Provision Profits
Change (%)
Provisions (excl tax)
PBT
Tax
Tax Rate (%)
PAT
Change (%)
Equity Dividend (Incl tax)
Core PPP*
Change (%)
*Core PPP is (NII+Fee income-Opex)
2013
22,188
37.3
12,574
34,762
40.6
13,345
21,417
39.1
2,160
19,257
6,251
32.5
13,007
33.1
2,510
19,860
32.2
2014
27,163
22.4
17,216
44,378
27.7
17,499
26,880
25.5
3,617
23,263
7,085
30.5
16,178
24.4
3,397
25,218
27.0
2015
34,878
28.4
20,465
55,343
24.7
22,847
32,496
20.9
3,395
29,101
9,047
31.1
20,054
24.0
4,528
31,075
23.2
2016
45,667
30.9
27,121
72,789
31.5
29,764
43,025
32.4
5,363
37,662
12,268
32.6
25,394
26.6
5,062
40,419
30.1
2017E
58,574
28.3
37,758
96,332
32.3
40,001
56,330
30.9
5,859
50,471
17,135
34.0
33,336
31.3
6,796
51,724
28.0
2018E
76,322
30.3
46,983
123,305
28.0
50,002
73,304
30.1
8,972
64,332
20,908
32.5
43,424
30.3
8,853
68,697
32.8
(INR Million)
2019E
96,347
26.2
58,326
154,673
25.4
62,502
92,171
25.7
11,904
80,267
25,685
32.0
54,582
25.7
11,128
87,564
27.5
2020E
120,393
25.0
72,527
192,921
24.7
76,735
116,186
26.1
15,657
100,529
32,169
32.0
68,360
25.2
13,937
111,580
27.4
Balance Sheet
Y/E March
Share Capital
Reserves & Surplus
Net Worth
Of which Equity Networth
Deposits
Change (%)
of which CASA Dep
Change (%)
Borrowings
Other Liabilities & Prov.
Total Liabilities
Current Assets
Investments
Change (%)
Loans
Change (%)
Fixed Assets
Other Assets
Total Assets
2013
3,586
54,490
58,077
58,077
669,556
36.2
126,875
71.6
209,221
54,187
991,041
40,658
429,760
54.8
469,996
23.7
2,295
48,332
991,041
2014
3,606
67,611
71,217
71,217
741,920
10.8
163,447
28.8
213,143
63,877
1,090,158
58,917
409,503
-4.7
556,330
18.4
2,935
62,473
1,090,158
2015
4,177
112,622
116,800
116,800
911,758
22.9
210,790
29.0
262,204
70,942
1,361,704
75,572
432,285
5.6
755,498
35.8
3,190
95,160
1,361,704
2016
4,205
133,661
137,866
137,866
1,117,195
22.5
313,428
48.7
316,590
80,983
1,652,634
82,184
488,385
13.0
982,099
30.0
4,707
95,259
1,652,634
2017E
4,538
208,434
212,972
212,972
1,374,150
23.0
462,916
47.7
358,661
96,767
2,042,551
174,790
525,014
7.5
1,227,624
25.0
5,576
109,548
2,042,551
2018E
4,538
243,005
247,543
247,543
1,703,946
24.0
627,854
35.6
407,089
115,904
2,474,482
140,095
630,016
20.0
1,571,359
28.0
7,032
125,980
2,474,482
(INR Million)
2019E
4,538
286,459
290,997
290,997
2,198,091
29.0
858,400
36.7
462,014
138,978
3,090,080
169,357
756,019
20.0
2,011,339
28.0
8,488
144,877
3,090,080
2020E
4,538
340,382
344,920
344,920
2,835,537
29.0
1,141,030
32.9
525,790
166,808
3,873,055
214,766
907,223
20.0
2,574,514
28.0
9,944
166,608
3,873,055
Asset Quality
GNPA (INR m)
NNPA (INR m)
GNPA Ratio
NNPA Ratio
Slippage Ratio
Credit Cost
PCR (Incl Tech. Write off)
E: MOSL Estimates
943
70
0.20
0.01
0.64
0.34
92.6
1,749
261
0.31
0.05
0.85
0.26
85.1
3,134
877
0.41
0.12
0.70
0.20
72.0
7,490
2,845
0.76
0.29
1.21
0.57
62.0
11,714
3,992
0.95
0.33
1.00
0.55
65.9
13,157
4,338
0.83
0.28
1.20
0.65
67.0
18,867
6,405
0.93
0.32
1.30
0.65
66.1
(%)
28,012
8,646
1.08
0.34
1.30
0.65
69.1
7 April 2017
16

Yes Bank
Financials and Valuations
Ratios
Y/E March
Spreads Analysis (%)
Avg. Yield-Earning Assets
Avg. Yield on loans
Avg. Yield on Investments
Avg. Cost-Int. Bear. Liab.
Avg. Cost of Deposits
Interest Spread
Net Interest Margin
Profitability Ratios (%)
RoE
RoA
Int. Expense/Int.Income
Fee Income/Net Income
Non Int. Inc./Net Income
Efficiency Ratios (%)
Cost/Income*
Empl. Cost/Op. Exps.
Busi. per Empl. (INR m)
NP per Empl. (INR lac)
* ex treasury
Asset-Liability Profile (%)
Loans/Deposit Ratio
CASA Ratio
Investment/Deposit Ratio
G-Sec/Investment Ratio
CAR
Tier 1
2013
10.5
12.7
8.1
8.0
7.9
2.5
2.8
2014
10.6
12.7
8.1
7.9
8.0
2.7
2.9
2015
10.6
12.2
8.0
7.6
7.9
3.0
3.2
2016
10.0
11.2
7.6
6.9
7.1
3.1
3.4
2017E
10.1
11.2
7.6
6.8
6.9
3.3
3.6
2018E
9.7
10.7
7.1
6.2
6.2
3.5
3.8
2019E
9.3
10.2
6.6
5.8
5.7
3.5
3.8
2020E
9.2
10.1
6.6
5.7
5.7
3.5
3.8
24.8
1.5
73.2
31.7
36.2
25.0
1.6
72.8
38.8
38.8
21.3
1.6
69.9
37.0
37.0
19.9
1.7
66.3
37.3
37.3
19.0
1.8
64.6
39.2
39.2
18.9
1.9
60.9
38.1
38.1
20.3
2.0
58.8
37.7
37.7
21.5
2.0
58.9
37.6
37.6
40.2
49.1
143.1
18.5
41.0
44.8
138.5
18.4
42.4
42.9
137.2
18.6
42.4
43.6
125.6
16.9
43.6
44.6
117.0
16.6
42.1
44.6
113.7
16.8
41.6
44.6
118.7
17.3
40.7
43.6
129.5
18.4
70.2
18.9
64.2
54.8
18.3
9.5
75.0
22.0
55.2
54.8
14.4
9.8
82.9
23.1
47.4
69.4
15.6
11.5
87.9
28.1
43.7
72.0
16.5
10.7
89.3
33.7
38.2
72.6
17.7
12.9
92.2
36.8
37.0
73.7
16.6
12.4
91.5
39.1
34.4
77.4
15.2
11.6
90.8
40.2
32.0
81.5
13.9
10.9
Valuation
Book Value (INR)
Change (%)
Price-BV (x)
Adjusted BV (INR)
Price-ABV (x)
EPS (INR)
Change (%)
Price-Earnings (x)
Dividend Per Share (INR)
Dividend Yield (%)
E: MOSL Estimates
161.9
22.2
9.7
161.8
9.7
36.3
31.0
43.2
6.0
0.4
197.5
21.9
7.9
197.0
7.9
44.9
23.7
34.9
8.0
0.5
279.6
41.6
5.6
278.2
5.6
48.0
7.0
32.6
9.0
0.6
327.8
17.3
4.8
323.4
4.8
60.4
25.8
25.9
10.0
0.6
469.3
43.2
3.3
463.6
3.4
73.5
21.6
21.3
12.9
0.8
545.5
16.2
2.9
539.3
2.9
95.7
30.3
16.4
16.7
1.1
641.2
17.6
2.4
632.1
2.5
120.3
25.7
13.0
21.0
1.3
760.1
18.5
2.1
747.7
2.1
150.6
25.2
10.4
26.4
1.7
7 April 2017
17

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Yes Bank
Disclosure of Interest Statement
Analyst ownership of the stock
No
Served as an officer, director or employee -
No
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