Yes Bank plans to double both its assets as well as liabilities in the retail and SME (small and medium enterprises) segment in the next two years in an attempt to derisk its book and reduce costs as it seeks to grow after a RBI mandated restructuring in March.
Rajan Pental, head of retail at the bank said the bank expects retail and SME loans to make 60% of its loan book by March 2023 up from 45% now similarly retail deposits will increase to 60% of total deposits from 47% now. The bank has also reduced its deposit rates by upto 100 basis points to reduce its costs. One basis point is 0.01 percentage point.
“We want to vacate the position of being one of the top deposit rate giving banks and come on par with others in the segment. We have already reduced both our CASA as well as fixed deposit rates,” Pental said. Deposits in the bank’s savings account now yield a minimum of 4% but still higher than the 2.75% offered by large lenders like State Bank of India (SBI).
Since a government backed bail out, led by SBI, in March, Yes Bank has shifted focus to make its book more granualar led by retail loans and deposits adding new accounts and stepping up loan disbusements.
“We are now adding 70,000 new current and savings accounts every month which is higher than even before the crisis. We expect to add 100,000 accounts per month by the end of the fiscal. Similarly, retail and SME disbursements are increasing quarter over quarter and we target to disburse Rs 10,000 crore in the current quarter,” Pental said.
The bank hopes to add new loans from the consumer facing auto, personal and home loans versus the commercial vehicles and equipment financing which constitute half of its retail loans currently.
Similarly, after arresting the slide in deposits that started last fiscal, Yes Bank hopes to increase total deposits to Rs 2 lakh crore from Rs 1.37 lakh crore in September.
“We are adding accounts organically through referrals, events and existing relationships. We have also been able to bring back some customers with residual balances who had not used the accounts post the crisis,” Pental said.
The additions in current and savings accounts could help the bank improve its CASA ratio to about 30% of deposits from 24% currently, allowing it to lower its cost of funds, he said.
On Tuesday, the bank launched a new product targeting to get deposits and business from the mass affluent segment called Yes Premia.
It expects to tap individuals with CASA deposits totalling Rs 2 lakhs or above with special offers like health benefits for senior citizens. The bank hopes to pump up its low cost deposits with this new segment and ensure it can cross sell its products to this segment.