Yes Bank expects its loan book to grow 25 percent this financial year, compared to the industry growth rate of 14-15 percent, according to Rajat Monga, Chief Financial Officer of the bank.
In an interview with CNBC-TV18's Latha Venkatesh and Reema Tendulkar, he said the cost of funds is not falling, but is stabilizing around 8 percent.
He sees Yes Bank's net interest margins rising 10-15 basis points this quarter due to the cushion of capital recently raised. In the medium term, Monga sees NIMs rising by 30-40 basis points.
He expects the pace of increase in non-performing assets for the industry as a whole to reduce this year.
Below is the transcript of Rajat Monga's interview with Latha Venkatesh and Reema Tendulkar on CNBC-TV18.
Latha: Is the cost of money falling, wholesale or retail?
A: Cost of money is more than falling or rising, it is getting entrenched at 8 percent, which is what Reserve Bank of India (RBI) policy is reinforcing more and more. As we saw, liquidity get better in the last two-three weeks, RBI has been proactively introducing the reverse repo windows, which also sucks away the excess liquidity and again calibrating it such that the clearing prices as close to 8 percent as possible.
So the difference between the last few quarters particularly from one-year ago, when we were in a very disorderly interest rate environment, is that the environment is now stable and well entrenched at 8 percent. Cost of money has been rangebound. It is just that the volatility of cost of money is definitely coming down, getting more predictable but I don't think I can yet say that the cost of money is falling.
Reema: We are trying to assess the improvement that we have seen on the ground. Has there been an increase in lending activity by the bank in Q2 or in Q3? Let us talk about six months if you cannot give numbers, what will be the lending growth or the advances growth, will it be better than what we saw in the last two-three quarters?
A: As you would have seen that Yes Bank has raised more capital in Q1 of this fiscal year, so we may be little bit more peculiarly placed that we can put more growth on the table than the other banks could and you will see that our Q1 numbers also had about 23-24 percent advances growth. That trend, at least from our standpoint, will continue.
This quarter it might get better because last year's base was little hurt by RBI developments at that point in time but the trend will be little bit on the higher side because we have more resources, opportunity is definitely increasing, it is not that the opportunity is coming in and pouring in but the quality of the opportunity is increasing.
If nothing else, the new government is at least enabling the problem solving in the banking asset environment and that is also creating financing opportunity. So the calls with customers are increasing, the queries are increasing, bulk transactions are still lining up.
Reema: So 25-30 percent advances growth for FY15?
A: I would look at - for Yes Bank as such - closer to 25 percent.
We are dealing with a base issue. So the base is noisy like I was mentioning about on the interest rate side. It is also noisy on the loan side because similar period last year banks loan growth was heavy because of their disintermediation that money markets were having so banks were having to lend more. So it will normalise. This is currently a base period. So hopefully closer to 14-15 percent for the full year at an industry level is looking likely.
Yes Bank stock price
On September 12, 2014, at 11:10 hrs Yes Bank was quoting at Rs 625.00, down Rs 0.05, or 0.01 percent. The 52-week high of the share was Rs 629.50 and the 52-week low was Rs 274.35.
The company's trailing 12-month (TTM) EPS was at Rs 39.85 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 15.68. The latest book value of the company is Rs 172.66 per share. At current value, the price-to-book value of the company is 3.62.
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