Citi has maintained its Sell rating on Yes Bank with a target price of Rs 22, even as the lender focuses on improving the quality and durability of its balance sheet.
At Citi's India Financials Investor Forum 2026, Yes Bank CFO Niranjan Banodkar outlined a “quality over velocity” approach, with the bank prioritising granular deposits, diversified funding tenors and sustainable long-term earnings over headline growth.
Citi expects Yes Bank to garner less than 2% of the industry's incremental FCNR mobilisation, estimated at around $2 billion or 6% of deposits. Around 75% of the mobilisation is estimated to be leveraged. The bank plans to deploy the liquidity across government securities, tactical short-term corporate lending and, gradually, long-term loans.
However, Citi expects the excess FCNR liquidity and leverage at the International Banking Unit (IBU) to weigh on margins temporarily. The brokerage expects this pressure to normalise over the next two quarters as liquidity is redeployed into loans.
On growth, retail disbursement growth has re-accelerated to 27.5% year-on-year (YoY), although the retail loan book grew a more modest 6.9% YoY due to higher run-offs. Citi expects high-single-digit retail loan growth by FY27-end, potentially moving into double digits by mid-FY27 and reaching 15% or more thereafter.
Citi also expects the implementation of the Merchant Discount Rate (MDR) to be fee-accretive, estimating a low-to-mid single-digit uplift to operating profit.
Credit costs are expected to remain anchored at 50 basis points or lower, excluding security-receipt-related volatility, with no fresh asset-quality stress anticipated.
Meanwhile, the bank remains focused on improving core profitability while reducing the impact of treasury and SR-related volatility. The verdict on AT1 instruments remains pending, while the collaboration with SMBC is gaining momentum across origination, best-practice sharing and ecosystem access.
Citi's Yes Bank share price target of Rs 22 implies a 1.2x multiple on September 2027 adjusted book value, based on its two-stage Gordon Growth Model.
According to Citi, key upside risks that could sustain the shares above its target price include improvement in overall asset quality, net interest margins (NIM) improving despite structural headwinds, and higher-than expected growth resulting in superior RoA profile.
On Wednesday, Yes Bank share price ended 0.17% higher at Rs 23.24 apiece on the BSE.
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