Behavioural biases that damage your investments!
In matters of investment, the sooner you acknowledge your mistakes, the sooner you'll find help in getting out of the soup. To break free from biases, the first step should be to identify those biases, says, Balwant Jain, Tax and Investment Expert.
Shares of Yes Bank were trading 4.67% higher at Rs 13.68 apiece after the bank reported a 355% year-on-year (y-o-y) rise in net profit at Rs 206.84 crore for the quarter ended June 30 on Friday. The bank had reported a profit of Rs 45.44 crore in the corresponding quarter last year. On the other hand, the net interest income of the bank declined 26.50% y-o-y to Rs 1,402 crore.
Provisions declined 40.70% y-o-y to Rs 644 crore. The operating profit of Yes Bank also declined by 19.80% y-o-y to Rs 920 crore during the period under review. On the asset quality front, the percentage of gross non-performing assets (NPAs) improved 15.60% of the gross advances as of June 30, 2021, from 17.30% in the year-ago period. Net NPAs increased to 5.78% from 4.96% in the year ago period.
While the bottomline growth seems fascinating the asset quality is still a question. Here is what brokerages have to say
ICICI Securities | Rating: Hold | Price target: Rs 14
In Q1FY22 Yes Bank slippages of more than 5% were offset by upgrades, recoveries and write-offs. While gross NPAs remained stable, credit cost was contained at 1.6%. The share of retail/SME mix improved 200 basis points quarter-on-quarter to 53% and CASA improved 130 basis points to 27.4%.
The sharp spike in retail slippages and retail overdue buckets, elevated stress pool with net labelled exposure at 7.4%, restrictions on network partner Mastercard to adversely impact new credit card issuances should be closely tracked. Return on Equity of less than 6% over the next couple of years will likely cap rerating beyond 1x FY23E book.
Kotak Institutional Equities | Rating: Sell | Price Target: Rs 11
Yes Bank reported a marginal profit led by lower provisions though the operating performance was weak with a 20% y-o-y decline in operating profit growth. Deposit mobilization continues to show strong traction but stress in the loan book continues to remain high. Common Equity Tier-1 at 11.6% is above regulatory limits but the bank would continue to have to make higher provisions in the medium term for the unprovided part of the stress book.
(Disclaimer: The recommendations in this story are by the respective research and brokerage firm. Money9 & its management do not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)