Yes Bank MD&A Analysis 2018

Macroeconomic Impacts:
The withdrawal of legal tender character of specified bank notes by the Reserve Bank of India in
November 2016 and the implementation of the Goods and Services Tax in July 2017, resulted in
a transient loss in growth momentum, especially in H1. However, the recovery has been stronger
in H2 FY18, led by Government consumption growth and gross fixed capital formation.
Comparison of financial performance with last year (Ratio Analysis)

 Asset Quality: YES bank’s FY18 asset quality was marred by the Rs. 63.6bn GNPA
divergence between RBI’s assessment and the bank’s own, resulting in slippages of Rs.
82.2bn (6.2% of advances). The bank has resolved (recovery/upgrade/sold to ARC) Rs.
58.6bn (92.4%) out of the total divergence, with the remaining 7.6% being downgraded to
NPA, with the credit costs coming in at 76bps. Total net stressed assets at 1.7% remains
among the lowest in the banking system.
 ALM Profile: Liabilities moving towards longer maturities (improving retail liability
franchise) and assets moving towards shorter maturities (lower project risk in the corporate
book) have resulted in continuously decreasing liability-asset mismatches over the last 5
years(8% mismatch in <1yr). Concentration of advances and deposits increased in FY18,
while concentration of NPAs reduced from 55% from 77% level seen in FY17.
 Capital: YES bank’s Liquidity Coverage Ratio (LCR) of 95% is ahead of the 90%
requirement. The retail deposits (as per LCR disc.) declined from 33% in FY17 to 29% in
FY18, owing to overall deposits growth (41% yoy), outpacing that of retail deposits (25%).
 Cover for NPAs: Overall GNPAs reduced to 1.28% in FY18 primarily led by decline in agri
NPAs from 3.6% in FY17 to 1.0% in FY18; industry NPA reduced marginally, while retail
NPA increased to 0.5% from 0.1% in FY17. Non-performing investments increased from Rs.
460mn to Rs. 675mn. Total provisions increased from Rs.400mn to Rs. 606mn. The
provision coverage ratio of the bank stands at 50% in FY18.
Gross NPA Percentage CASA Ratio Percentage

36.30% 36.50%
2.00% 1.52% 40.00%
1.28% 28.10%
1.50% 30.00% 22.00% 23.10%
18.90%
1.00% 0.76% 20.00%
0.41%
0.50% 0.20% 0.31% 10.00%
0.00% 0.00%
FY13 FY14 FY15 FY16 FY17 FY18 FY13 FY14 FY15 FY16 FY17 FY18
Capital Adequacy Ratio Net Interest Margin

Percentage Percentage
18.3% 14.4% 15.6% 16.5% 17.0% 18.4% 3.5%
2.9% 2.9% 3.2% 3.4% 3.4%
20.0% 5.0%
0.0% 0.0%
FY13 FY14 FY15 FY16 FY17 FY18 FY13 FY14 FY15 FY16 FY17 FY18
COMPANY STRATEGIES
Yes Bank is following a holistic approach when it comes to achieving their goals and
maximizing their shareholder value through six areas. These areas expressed in terms of capital
are- Financial, Human, Social and Relationship, Intellectual, Natural and Manufactured.
In terms of the financial capital, the bank has focused on strong corporate governance and
regulatory systems. As a result the Net Income has grown by almost 26.9% to reach a figure of
Rs. 4226 crore. Yes Bank is also focusing on inclusive growth and has reached to almost 21 lakh
families at the bottom of the pyramid. The Bank follows a 5 C engagement model i.e. Culture,
Communication, Connect, Career and Care. YES School of Banking is a unique development
function that has enabled employees to further their career prospects. The bank is working on
increasing its social presence by collaborating with national and international thought leaders and
is focusing on knowledge driven banking solutions for its consumers. Through its Environment
and Social Policy, the Bank has integrated environmental and social risk assessment into its
overall credit risk framework. YES BANK has a ‘Digital +Physical’ infrastructure for growth.
They have 1724 ATMs and 1100 branches pan- India. The bank has built capacity through two
Operating centers and one Central Customer Services Delivery Excellence Center.
RISK MANAGEMENT
Yes Bank’s risk management is based on three defense lines- Business Units, Independent
Control Units and Audit. The bank manages the following risks:
ENTERPRISE RISK MANAGEMENT
Yes Bank manages this risk through an Enterprise Risk Management Unit that is responsible for
implementation of frameworks and manages reputation, compliance and concentration risk.
CREDIT RISK MANAGEMENT
Credit risk management is governed by a comprehensive credit policy. This policy encompasses
guidelines for monitoring and mitigating risks. All credit proposals are approved through a
committee approach or joint delegation. Along with this the bank has in place additional
scorecards for retail and SME borrowers.
MARKET RISK
The bank measures currency, liquidity and interest risk through Liquidity Monitoring, Liquidity
Gap Analysis, Dynamic Cash Flow Analysis, Intraday Liquidity, Liquidity Coverage Ratio, ,
Value at Risk, Earnings at Risk and Market Value of Equity, Sensitivity Analysis and robust
internal risk models. Along with this, Yes Bank conducts stress testing to assess how vulnerable
the bank is to unfavorable shocks.

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Macroeconomic Impacts:

Comparison of financial performance with last year (Ratio Analysis)

Gross NPA Percentage CASA Ratio Percentage

Capital Adequacy Ratio Net Interest Margin

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