BWI: Brickwork Ratings Assigns “BWR AA+” for Yes Bank Ltd’s Lower Tier II Bonds Issue of INR 300 crore or INR 3 billion

Press release from Business Wire India
Source: Brickwork Ratings
Wednesday, December 30, 2009 05:09 PM IST (11:39 AM GMT)
Editors: General: Consumer interest, Economy; Business: Accounting & management consultancy services, Advertising, PR & marketing, Banking & financial services, Business services, Financial Analyst, Stock exchanges
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Brickwork Ratings Assigns "BWR AA+" for Yes Bank Ltd's Lower Tier II Bonds Issue of INR 300 crore or INR 3 billion
Issue Rating: BWR AA+; Outlook: Stable

Bangalore, Karnataka, India, Wednesday, December 30, 2009 -- (Business Wire India) -- Brickwork Ratings has assigned BWR AA+ (Outlook: Stable) for Yes Bank's proposed Lower Tier II Bonds issue of Rs 60 crore. Further, it has revalidated the earlier similar rating assigned to Yes Bank's proposed Lower Tier II Bonds issue for Rs. 240 crore. Accordingly, the Bank's proposed Lower Tier II Bonds issue aggregating Rs. 300 crore is rated "BWR AA+" by Brickwork Ratings. "BWR AA+" signifies 'high credit quality' in terms of timely servicing of debt obligations.

In Q2 FY 10, the bank has sustained its growth momentum in spite of many challenges witnessed in the banking industry front such as passive credit off take, and restructuring of non-performing assets. However, the bank has benefited largely from its fee income, pricing power on corporate loan book and repricing of interest sensitive liabilities during the year. As a result, the bank has improved its operating and net profits by 50.7% and 51.9% respectively to reach a level of Rs 527 crore (Rs 350 crore in FY08) and Rs 303 crore (Rs 200 crore in FY08) during FY 09. The bank has extended its good run in the operating profits generation in Q2 FY 10, which has stood at Rs 191.8 crore as compared to Rs 98.0 crore (a growth of 95.71%) for the same period a year ago. Net interest income has increased significantly during the year to achieve a level of Rs 159.9 crore in Q2 FY 10 from the previous level of Rs 122.6 crore in Q2 FY 09.

Gross NPAs have declined from 0.68% in FY09 to 0.31% in Q2 FY 10 (0.44% in Q2 FY 09). Net NPAs have dipped from 0.33% in FY 09 to 0.08% in Q2 FY 10 (0.15% in Q2 FY 09). Restructured loans were about 0.96% of gross advances during quarter.

In spite of subdued credit growth, the bank's net interest margin has improved to 3.1% during Q2 FY 10 from 2.8% for the same period a year ago. The bank was able to achieve a growth in net interest margin by penetrating the large corporate loan market and also optimizing its liability franchise. Bank's yield on advances is comparatively higher than its peers' average.

The bank's composition of low-cost deposits to total deposits has improved marginally to 9.6% in Q2 FY 10 from at 8.73% in FY 09, considerably lower than peers' average. Consequently, the bank has the highest cost of deposits among its peers as on 30th September 2009.

Brickwork calculates leverage that assesses bank's capital adequacy with reference to both on and off balance sheet exposures. Yes Bank's lower leverage of 13.92 (14.92 in FY08) is positive rating factor compared to its peer group leverage of 19.51 in FY09.

The rating factored, inter alia, improving operating profit, asset quality, strong capital ratio, and the management quality, low CASA deposits, limited network channels, and dependence on bulk deposits. Brickwork expects the bank to sustain its growth momentum and ensure healthy earning assets with appropriate risk management practices, and technology driven banking and has assigned 'Stable' outlook for the Rating.

Copyright ©, 2009, Brickwork Ratings.

Brickwork Ratings has assigned the rating based on the information obtained from issuer and other reliable sources, which are deemed to be accurate. Brickwork has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented "as is" without any express or implied warranty of any kind. Brickwork does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by Brickwork should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument. Brickwork has the right to change, suspend or withdraw the ratings at any time for any reasons. Further, Brickwork should not be held responsible for any losses incurred from publishing or reproducing this report.


CONTACT DETAILS
Dr. A Suresh Kumar, Lead Analyst, Brickwork Ratings, 1-860-425-2742, suresh.kumar@brickworkratings.com
N Prashanthi, Co-Analyst, Brickwork Ratings, 1-860-425-2742, prashanthi.n@brickworkratings.com
Anitha G, Media, Brickwork Ratings, 1-860-425-2742, media@brickworkratings.com
K N Suvarna, Sr. VP - Business Development, Brickwork Ratings, 1-860-425-2742, kn.suvarna@brickworkratings.com

KEYWORDS
CONSUMER, ECONOMY, CONSULTANCY SERVICES, MARKETING, BANKING, BUSINESS SERVICES, Financial Analyst, STOCK EXCHANGES

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