Yes Bank makes biggest market cap gain among Indian lenders in Q4 2023

Yes Bank Ltd. posted the highest percentage increase in market capitalization among Indian banks in the quarter ended Dec. 31, 2023, as the private-sector lender progressed in mending its balance sheet.

Market capitalization at the once-troubled lender rose 24.4% to 616.94 billion rupees from October to December, helping Yes Bank move two slots higher to 14th position in the list of top 20 Indian banks by market cap, according to S&P Global Market Intelligence data.

Yes Bank investors had been barred from selling shares on the open market under a three-year lock-in period that ended in March 2023 as part of conditions contained in a rescue package sponsored by State Bank of India in 2020. The bank has sought to repair its balance sheet since the lock-in ended, which included putting a portfolio of 42.33 billion rupees of stressed loans up for sale this past December.

The bank has shown signs of improvement, reporting a net profit of 5.75 billion rupees in the April-to-September 2023 period, against 4.75 billion rupees in the same period in the previous fiscal year. Gross nonperforming ratio loans fell to 2.0% in the first half of the current fiscal year, which ends March 31, from 12.9% a year ago, while its Basel III capital adequacy ratio was stable at 17.1%, the bank said in an exchange announcement on Oct. 21, 2023.

In terms of market cap percentage growth, Punjab National Bank was just behind Yes Bank with a quarterly increase of 19.4% to 1.054 trillion in the three months ended Dec. 31, 2023. This saw it gain one spot from a quarter ago, to eighth position on the top 20 list, which had HDFC Bank Ltd. at its top.

Red hot market

Investors have been piling on Indian shares, seeking a slice of the world's fastest-growing major economy. The benchmark 30-share BSE Sensex index climbed 9.7% in the three months ended December 2023, while the Nifty 50 index of the 50 biggest Indian companies by market cap was up 10.7% in the quarter. Sector indexes focused on banking stocks, such as the BSE Bankex and Bank Nifty, each gained more than 8% in the same three-month period.

The Reserve Bank of India expects the average gross nonperforming asset (NPA) ratio of Indian banks to improve to 3.1% by September 2024, from 3.2% currently, according to its biannual Financial Stability Report, released Dec. 28, 2023.

India's government expects gross domestic product to grow 7.3% in the fiscal year that will end on March 31, compared with 7.2% growth in the previous fiscal year. The Reserve Bank of India has held interest rates steady since April 2023, an indication that policy rates may have peaked. Most economists expect major global central banks to begin easing monetary policy in 2024.

Double-digit gains

Overall, 14 of the 20 largest banks in India reported gains in market capitalization in the October-to-December quarter, eight of them with double-digit increases, Market Intelligence data shows. The top seven Indian banks retained their market cap ranking during the quarter, with HDFC Bank Ltd. cementing its lead as the biggest Indian lender by the measure after its merger with parent Housing Development Finance Corp. Ltd. that became effective on July 1, 2023.

ICICI Bank Ltd. retained its second spot in the market cap ranking, while State Bank of India, the biggest Indian lender by assets, was third by market capitalization.

Some state-owned lenders posted declines in their market cap in the quarter. These included UCO Bank with a 8.7% fall and Indian Overseas Bank with a 7.4% drop, according to the data.

As of Jan. 12, US$1 was equivalent to 82.80 Indian rupees.