YES BANK Presentation Index Large Bank Growth Phase ‘FY16 - FY20’ – Enablers & Key Highlights 3 Business Segments – Corporate, SME & Retail 11 Product Capital and Knowledge Banking: Illustration 16 Liability Franchise 21 Asset Quality 27 Digital Banking 30 Other Key Highlights 38 Q1FY19 Update 48 2 YES Bank At a Glance Greenfield Bank built on culture of Owner – Partner – Manager model SIZE PACE One of the Fastest Growing th 4 Largest Private Sector Bank; capturing Incremental Bank with Asset size in Market Share at a fast pace excess of ` 3 Tn (9.2%in FY18 for Advances v/s static market share of 2.3%) EFFICIENCY RETURNS Amongst Most Profitable Best in Class Shareholder Banks in the Industry with Returns with RoA > 1.5% & RoE> one of the lowest C/I ratio at 17% consistently since 2010 37.3% as on Jun 30, 2018 REACH QUALITY Expansive presence with 1,100+ Best in Class Asset Quality branches; further augmented by Metrices with One of the lowest Digital Channels GNPA & NNPA ratios at 1.31% and 0.59% respectively (Jun 30, 2018) VISION: To Be India’s Finest Quality Large Bank By 2025 3 Journey into Large Bank Growth Phase SMALL Bank MEDIUM Bank LARGE Bank Set-Up Phase Build-Up Phase Scale-Up Phase (Inception – FY10) (FY11– FY15) (FY16– FY20) • Only Greenfield Bank to be • Established Corporate & • Rapidly expanding Market established in India (in SME Banker. share supported by all 3 2004) over past 2 decades. engines of growth: Corporate, • Expansion of Retail MSME & Retail • Started as Mid Corporate/ Liabilities, Distribution SME Bank Network, Products & • Deepening Mindshare: People Capturing entire Lifecycle of • Building Blocks for Retail its Customers Liabilities • Building blocks for Retail Assets • Increasing Granularity: • CASA ratio reached 10.5% Momentum in Retail Assets & • CASA Ratio reached 23% SME • CAGR: (FY07-10) Advances – 74.3% • CAGR: (FY11-15) • Building Blocks for Future Deposits – 74.2% Advances – 27.8% Now : Digital Strategy PAT – 71.4% Deposits – 27.7% PAT – 33.2% • CASA ratio at 35.1% & Retail Advances at 14% (Jun, 2018) • CAGR (FY16-18) Advances – 39.1% Deposits – 30.1% PAT – 28.2% 4 Key Strategic Enablers for the Large Bank Growth Phase Comprehensive Product Suite: 1 • Offering complete array of Products & Services across Corporate, SME & Retail Businesses. Emerged as Life Cycle Banker given Depth and Width of Solutions offered Solution Driven Knowledge Banking Approach: 2 • Deepening Mindshare through expertise in Focused Sunrise sectors across Product, Relationship & Risk Leadership in New Age Technology: 3 • Using Digitization & Technology Innovation to drive Customer Acquisition / Enhance Experience / Improve Efficiency & Explore New Business Lines Prudent Risk Management Framework: 4 • Demonstrated Resilience in Asset Quality across Macroeconomic cycles Expansive Reach 5 • 1100+ Branches which is further augmented by Digital Channels Experienced Leadership: 6 • Finest Human Capital Management with Strong Vintage in YES Bank as well as Industry Pioneers Vibrant YES BANK Brand: 7 • Strong Brand Recall; resonating with Trust/Credibility/Quality 5 Large Bank Growth Phase (FY16-20): Growth Strong Growth across Segments with Incremental Corporate lending to Higher Rated Customers Advances: CAGR(FY16-18): 39% Deposits: CAGR(FY16-18): 30% USD Billion 30 USD Billion 29 19 21 16 14 13 11 Mar'15 Mar'16 Mar'17 Mar'18 Mar'15 Mar'16 Mar'17 Mar'18 Increasing Market Share Advances Deposits 1.7% 2.3% 1.2% 1.3% 1.7% 1.0% 1.1% 1.3% FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 Incremental Share at 9.2% (FY18) Incremental Share at 6.9% (FY18) 6 Large Bank Growth Phase (FY16-20): Granularity Growth Momentum in CASA CASA Market Share more than doubled (FY16-FY18) to 1.5% CASA: CAGR(FY16-18) : 51% CA Market Share 36.3% 36.5% 2.5% USD Million 1.8% 1.0% 1.2% 28.1% 6,467 23.1% 4,780 SA Market Share 1.0% 1.2% 2,977 0.5% 0.8% 1,834 4,204 2,783 1,239 1,593 Mar'15 Mar'16 Mar'17 Mar'18 FY15 FY16 FY17 FY18 CA SA MSME now Constitutes 18.4% of Total Advances, Retail Advances now Constitutes 14.0% of Total Healthy Growth despite headwinds of GST & Demonetization Advances, up by 400 bps+ over the last one year MSME: CAGR(FY16-18) : 27% Retail Advances: CAGR(FY16-18) : 53% USD Million USD Million 5,920 3,621 4,404 3,460 2,885 1,545 1,819 1,002 Mar'15 Mar'16 Mar'17 Mar'18 Mar'15 Mar'16 Mar'17 Mar'18 7 Large Bank Growth Phase (FY16-20): Profitability Strong growth in Income Streams Cost Efficiency and Contained Credit Costs CAGR(FY16-18) : Net Interest Income: 30%; Non Interest income: 37% 42.0% 41.3% 40.9% 41.4% 0.76% 0.80% USD Million 40.2% 0.60% 762 38.0% 0.53% 606 0.50% 0.40% 395 34.0% 0.38% 298 1,128 0.20% 845 509 666 30.0% 0.00% Mar'15 Mar'16 Mar'17 Mar'18 Mar'15 Mar'16 Mar'17 Mar'18 Net Interest Income Non Interest Income Cost/Income Credit Costs Consistent Profit Delivery Healthy Return Ratio CAGR(FY16-18) : PAT: 28% 1.9% 1.8% 24.0% USD Million 1.8% 1.7% 1.7% 1.6% 1.6% 1.6% 21.5% 20.0% 1.5% 616 19.9% 1.4% 19.0% 486 1.3% 17.7% 16.0% 370 QIP – US$ 292 1.2% 750Mn. 1.1% 1.0% 12.0% Mar'15 Mar'16 Mar'17 Mar'18 FY15 FY16 FY17 FY18 Return on assets Return on equity 8 Profitability Drivers: Margins Margin Drivers remain intact despite recent headwinds ✓ Lag in MCLR book re-pricing: ▪ >60% of the Advances linked to MCLR; of which >2/3rd book linked to 1 Yr MCLR ✓ Momentum in CASA to continue INCREASING TRAJECTORY OF NIM ▪ To achieve 40% by 2020 from 35.1% currently 3.5% 3.4% 3.4% ✓ Stored Value in SA Rate 3.2% ▪ Average SA rate at ~6% compared to ~4% for industry Mar'15 Mar'16 Mar'17 Mar'18 ✓ Well poised for Increasing Interest Rate scenario ▪ Higher portion of Fixed rate liabilities v/s Fixed rate assets ▪ Gap to bridge with increasing share of Fixed Rate Retail Assets ✓ Other Factors ▪ Improving PSL compliance ▪ Reduced Cost of Funds due to Rating upgrade to AAA 9 Profitability Drivers Healthy Income Growth with Increasing Efficiencies and Best in Class Credit Cost ✓ Cost/Income ratio stabilizing at <40% ✓ Improving Asset Quality Outlook; Maintained Credit Costs guidance of ✓ Operating Leverage resulting in 50-70 bps for FY19 given: improving operating efficiencies from investments in: ▪ Lending to Better Rated corporates ▪ Operating Contained ▪ Branches Efficiencies Credit Cost Decreasing trend of RWA/Total Assets ▪ People ▪ Increasing granularity ▪ Technology Detailed Slide on Asset Quality Healthy Non-Interest Income ✓ Expertise and Penetration in Corporate Houses driving Corporate Banking Fee ✓ Forex & DCM Fee increased ~4x during FY16-18; contributes 21% of Total Fee in FY18 up from 14% in FY15 ✓ Accelerated Momentum to continue in Retail Fee: Grew 2.6x during FY16-18 ✓ Corporate/SME Relationships and Digital Innovation to drive Transaction Banking Income 10 BUSINESS SEGMENTS 11 Seasoned Corporate Banker: Capturing market share with the Large Corporate Groups USD Million CAGR of 41% (FY16 - 18) Healthy Growth Delivery continued: 2,766 2,101 ✓ Strong growth across all Corporate Segments including IBU 880 ✓ Lending to Large & Better Rated Corporates ▪ Resulting in improving Risk profile: A & Above rated exposure 18,038 18,388 increased to 78.9% as on Jun ’18, up from 76.5% in Mar’17 13,065 9,317 7,130 ✓ Decreasing RWA/Total Assets ▪ Improved to 81.6% as on Jun’18 from 86.7% in Mar’17 indicating Mar'15 Mar'16 Mar'17 Mar'18 Jun'18 incremental lending at lower Risk Weights Domestic Corporate Book IBU Opportunities Inherent Enablers for Quality Corporate Growth ✓ Financing ▪ 8 Focused Corporate Relationship Groups including IBU– Expertise across Product Seasoned Assets: & Relationships & Risk – Further supported by Complete Product Suite Eg. NCLT ▪ Knowledge Banking Driven Solutions through Sectoral Expertise ✓ ▪ Size, Scale and Expertise: Ability to underwrite large commitments basis increasing Refinancing SBL/GBL limits coupled with Strong Syndication Capabilities Opportunities ▪ Technology & Services Leadership: Superior Customer Experience driven by cutting ✓ New Economy Edge Technology such as API Banking/Blockchain Capex (Part of ▪ Benign Competitive Environment Knowledge ▪ Prudent Risk Management Practice: CRM Based Origination reducing Adverse Banking Sectors) Selection Bias coupled with Superior Structuring Capabilities 12 MSME Finance: Focus on Sole Banking Relationships Healthy Growth in MSME Advances with best in class Portfolio: USD Million MSME CAGR of 27% (FY16 - 18) ✓ 3 focused Relationship Groups: ▪ Medium Enterprise: ($ 15 - 70 Mn): CRM based acquisition through 250+ Sector Specialists Relationship Managers. Avg. Ticket Size - $ 1.7 Mn 3,045 3,034 ▪ Small Enterprise($ 2 - 15 Mn): Sourcing through penetrating Supply chain 2,373 of Anchor Corporate Relationships. Avg. Ticket Size - $ 0.4 Mn 1,871 ▪ 1,335 Micro Enterprise ($ 0 - 2 Mn): Small Ticket granular lending leveraging on branch distribution network. Avg. Ticket Size - $ 0.1 Mn 2,876 2,730 2,031 1,550 1,590 ✓ Healthy Portfolio Quality: ▪ Mix of Manufactures, Traders and Vendors/Dealers of Marquee Corporates Mar'15 Mar'16 Mar'17 Mar'18 Jun'18 ▪ Cash Flow based lending with focus on obtaining preferential property of Medium Enterprise Small and Micro Enterprise Promoter as collateral ▪ Stringent Valuation Methodology for Collaterals, including Valuation Report by dual Independent Agencies and an Internal Audit team to maintain strict LTVs Road going Forward ▪ Continued focus on Sole Banking Relationships (SEB & MIB) and Primary Opportunity: Banking Relationships (MEB) ✓ Acceleration in ‘New To ▪ Deepening entrenchment in MSME Ecosystem: Focus on Cross Sell of Credit’ Customers into Formal Trade/CMS/Forex & Investment Banking products to create hooks Credit Sector due GST and ▪ Technology & Services Differentiators: Initiatives such as GST Invoice Demonetization Financing (First Bank to Launch), API Banking etc to drive acquisition.