What are your key priorities?
On priorities, I track four key pillars-what I call P, P, P and T-people, processes, products and technology. I am working on how to get the best out of my 30,000 staff. I firmly believe that every organisation has two types of customers: internal and external. If your internal customers, your employees, are fulfilled and engaged, it becomes far easier for them to fulfil your external customers. We have a very strong brand franchise. We have improved on many parameters over the last six years and the last quarter gives us hope that the coming quarters will be even better.
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Has Yes Bank factored in the financial liability of nearly ₹8,000 crore if the rules in favour of AT1 bondholders?
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I would not like to comment on this matter as it is sub judice.
SMBC has spoken about synergies with Yes Bank. Have those started flowing in?
An MoU is in place between us and we have started seeing business results from these references. For example, where SMBC has a corporate relationship but is not able to take it forward, we have pitched in. Similarly, through those corporate relationships, we can get into the employee banking ecosystem as well. Even in the last one, one and a half months, we have started seeing results flowing from this. And I am sure that going forward we will continue to build on this.
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How has the crisis changed the way you deal with your clients? And what has been the impact on your book?
Over the next couple of months, we will not be aggressive in lending to MSMEs until we derive greater comfort that the situation has stabilised. That said, we have done a detailed analysis of our book and do not see any specific stress emerging from the West Asia crisis at this point. We are closely tracking all assets with exposure to that region, and even anecdotally, we have not seen any undue anxiety.
Your margins at 2.6% are the lowest in the industry. How do you plan to improve the margins?
One thing I want to make clear is that structurally we are not capped at 2.6%. We have strong potential to move this higher, and I think we can easily get to around 3%, though I cannot put a specific timeline on it. A couple of things will naturally support this. First, the RIDF ( ) runoff; as that winds down, it will automatically flow through to NIM improvement. Second, the cost of deposits is coming down, which also helps.
Are low margins a new normal for the industry?
If you look at the banking industry broadly, margins are getting squeezed. We keep paying more for deposits, and because of intense competition, lending margins are also coming down. When you have a bond yield at 7.10% and the best housing loan rates at 6.9% to 7.2%, what sense does that make? I will leave it at that.
Is that the reason that banks have vacated the home loan space? Is that a strategy for you too?
I feel we should not vacate the space. We will stay but not be aggressive about it until the yields start making sense. Although, in the past for some time, there was a thought that we should move out of the segment because of poor yields.
Banks have performed well in CASA accumulation…
I think the money that was flowing out of bank deposits is slowly coming back. Anecdotally, I have started seeing that there are increasing enquiries from customers asking whether it is time to exit equities and come back to deposits, whether it is time to exit mutual funds and move back. That reversal in trend has started showing up. Markets have not been doing well, and that is perhaps driving people back towards the safety of bank deposits.
What would be the retail to wholesale mix?
We will maintain a strong focus on retail, which gives us both risk diversification and healthy margins, while simultaneously growing our well-rated corporate book. The two are not in conflict; we will pursue both. In terms of the current composition, corporate accounts for around 28-29% of the overall book, which is significantly lower than where it stood a few years ago. Commercial segment accounts for around 24%, and retail assets make up approximately 46-47%. Going forward, I would like retail to move to around 50% of the book, corporate to settle at around 25-26% and the commercial segment to hold at around 25%. That effectively means 75% of the book will be retail in nature.
You spoke earlier about leveraging corporates for deeper relationships…
Corporate relationships have their own strategic value beyond just the loan book. We do not want to exit any corporate relationships; they open doors across multiple business lines. The distinction I would draw is this: I want to double down on corporate relationships, not necessarily on corporate assets. I would rather use those relationships to generate retail assets and cross-sell across the bank. If you have a strong corporate relationship, you get salary accounts, you get the ecosystem around that company, like supply chain financing, invoice discounting, receivables financing. We will actively pursue that entire ancillary opportunity. We call it ecosystem banking, and it allows us to deepen wallet share with existing clients rather than simply adding more corporate loans to the book. That is the power of bringing all our verticals together as one Yes Bank.
What is your branch strategy?
Despite all the talk about digital transformation, banking at its core remains a very human, brick-and-mortar business. Has the stage come in where customers trust a bank purely on the strength of its digital interface? Not yet. Technology can support it, but it cannot substitute it.We have a retail franchise of 1,300 branches, and that is something we want to double down on. We have an expansion plan in place for approximately 400 new branches over the next four to five years. Last year we opened 82 branches, and this year we expect to open around 80-90 more.
Yes Bank was once the fourth largest private lender in the country. By when do you wish to regain that position?
We are ambitious to become (one of) the top five private sector banks in India and we are working towards it.
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