yes bank ltd share price Management discussions


Executive Overview

MACROECONOMIC AND INDUSTRY OVERVIEW

The economic setting for FY 2022-23 was a difficult one. Even as the global economy was recovering from the aftershocks of the COVID-19 pandemic, the world witnessed a major geopolitical conflict in early 2022 which prolonged the economic recovery. The pandemic-induced output contraction was followed by supply chain disruptions, rise in commodity prices and a surge in inflation in most economies worldwide. Global central banks, led by the US Federal Reserve, responded with a synchronised policy rate action. The tightening of the financial conditions across the world took its toll on the economic activity, while financial markets remained volatile and usually sensitive to the incoming data.

Even though, Indias economic growth has significant bearing of domestic consumption and investments, the country was unlikely to have remained totally decoupled from these global developments. High global commodity prices, especially of food and oil, led to an increase in imports, exports also lagged on account of slower global growth. This, along with the strengthening of the US dollar vis-a-vis basket of other global currencies, led to sharp depreciation pressures on the domestic currency. The second half of the financial year saw some respite in commodity prices owing to global slowdown fears, mending of the supply chains and reopening of China. Though inflation in many countries have cooled down from the peak, policy makers globally face a likely scenario of a slowdown in economic activity.

Domestic economic activity exhibited resilience in FY 2022-23 due to pent-up consumption demand, revival in the contact-intensive services sector and governments push for capital expenditures. In the first half of the previous financial year, the higher trade gap remained a drag on Gross Domestic Product (GDP) growth from the expenditure side, while private investment continued to lag on the back of weak external and domestic demand outlook. In the second half of the year, private consumption demand started to exhibit sluggishness with the normalisation of pent-up demand. This was partly neutralised by a reduction in drag from external trade as imports moderated faster than exports due to declining global commodity prices.

As per the official government estimates, Indias GDP is projected to have clocked 7.2% growth in FY 2022-23 and continues to be one of the worlds fastest growing economies, and also the fastest growing Asian economy. However, going forward, protracted geopolitical tensions, tighter global financial conditions, volatility in global financial market, slowing down of global growth and external demand, pose critical risks for Indias growth outlook. The Reserve Bank of India (RBI) estimates Indias GDP to grow by 6.5% in FY 2023-24, while the latest GDP growth estimate of the International Monetary Fund (IMF) is at 5.8%, quite higher than average level of growth estimated at 3.9% for Emerging and Developing Economies.

Like in many other parts of the world, India too, witnessed elevated levels of inflation in FY 2022-23 Indias, headline CPI inflation was already a tad above its threshold level of 6% in January and February 2022, while it shot up from March 2022 onwards to 7%+ levels. Matters were further complicated by the heat wave in April and a consequent loss of agricultural production, leading to food prices shooting up by 7.8% to 8.3% in April-June 2022. Government policies were unleashed to address the inflationary pressures. Exports of wheat and rice were banned, while the customs duty on edible oil was reduced. This led to retail food prices dropping to an average of 5.4% in the second half of FY 2022-23 from 7.8% in the first half of FY 2022-23. Headline CPI inflation dropped to 6.2% in the second half of FY 2022-23 from at 6.7% .2%in the first for the full year. While food prices exhibited volatility, core CPI remained sticky at higher levels through FY 2022-23, averaging at 6.2% in the second half of FY 2022-23 from 6.4% in the first half of FY 2022-23.

To contain inflation pressures in the economy, the RBI started to move away from pandemic-related monetary measures. First, the Central Bank set up a Standing rateDeposit Facility (SDF) at 40 bps above the fixed reverse repo rate. The repo rate hiking cycle started from May 2022 and it was raised by 250 bps till the end of FY 2022-23. Thus, the cumulative rate increase effected by RBI was 290 bps over the past one year. In tandem, the RBI also started to rein in surplus liquidity infused into the system through the pandemic period. With conditions around inflation improving, the central bank skipped hiking the repo rate in the April 2023 Monetary Policy, but RBI Governor Shaktikanta Das indicated this to be a “tactical pause and not a pivot”.

A strong and well-functioning financial sector fortifies the foundations of growth and development. The pandemic period had led to fears of erosion of health of Indias . financial sector. However, the RBI accorded the highest priority to preserving financial stability by taking quick and decisive steps to ease liquidity constraints, ensure adequate credit flows to the production sector and restore market confidence.

The RBI also strengthened the regulatory and supervisory framework for both banking and non-banking financial sectors to proactively identify, assess and deal with vulnerabilities. Thus, despite pandemic-induced bouts of volatility and global supply chain disruptions, the Indian financial system continued to be resilient, and is currently in a comfortable position to meet the credit demands as recovery and investment activity picks up. Indeed, the credit growth in FY 2022-23 was up 15.6% Y-O-Y, compared to a Y-O-Y growth of 11.0% in FY 2021-22. Credit growth has been improving in double digits for all population groups (rural, semi-urban, urban, and metropolitan). Growth was led by bank branches in metropolitan centres and accounted for nearly 60% of total credit by Scheduled Commercial Banks (SCBs). Private sector banks continued to outpace their public sector counterparts in credit growth and accounted for 38.4% share in total credit in September 2022 (vis-a-vis 37.5% a year ago and 29.6% five years ago).

According to the RBIs Financial Stability Report (December 2022), SCBs continued to bolster their capital, with a capital-to-risk assets ratio (CRAR) of 16.0% in September 2022. Gross non-performing assets (GNPA) ratio of SCBs has been steadily trending down, falling to a seven-year low of 5.0% in September 2022, while net non-performing assets (NNPA) dropped to ten-year low of 1.3%. The provisioning coverage ratio (PCR) has been increasing steadily from March 2021 and has risen to 71.5% by September 2022.Despite three quarterschallengingglobal of FY 2022-23. environment, the Indian banking system continues to be stable on the back of improving profitability and asset quality, with adequate level of liquidity and capital buffers. Moreover, the RBIs macro-stress tests for credit risks indicate that now SCBs are well-capitalised to withstand “moderate to severe” macroeconomic shocks.

Aggregate deposits recorded some moderation, growing at 10.2% in FY 2022-23 vis-a-vis 10.4% in FY 2021-22. This was led by a 13.5% growth in term deposits; while current and savings deposits recorded moderate growth of 9.8% and 5.0%, respectively. While the deposit mobilisation by public sector banks improved to 8.1% in FY 2022-23 (8.0% a year ago), it remained lower than 14.8% growth of the private sector banks. The all-India credit-deposit (C-D) ratio increased to 75.6% in March 2023 (compared to 75.9% in the previous quarter and 71.9% the last year).

External sector dynamics worsened in the first half of FY 2022-23 on account of an increase in imports (higher commodity prices) and a drop in exports (government restraint on exports of some commodities, including oil products and steel). Consequently, trade gap widened to around USD 28 billion by September 2022, but dropped back again to USD 19.7 billion by March 2023 owing to a drop in global commodity prices, including that of crude oil. On the other hand, net services exports improved consistently in the first Consequent to the above trends, Indias Current Account Deficit (CAD) widened to 3.7% of GDP in Q2-FY 2022-23 from 1.6% in Q4-FY 2021-22. Subsequent drop in oil prices led to a sharp improvement in the CAD/GDP ratio to 0.2% in Q4-FY 2022-23.

Global monetary policy dynamics led to an appreciation in the USD in firsthalf of FY 2022-23 by around 16% against a basket of major currencies. However, the Indian Rupee (INR) depreciated by only 6.8% against the USD, better than many other Emerging Market Economies. Market interventions by the RBI contained volatility and ensured orderly movement of the INR. The RBI also announced measures to enhance capital inflows. Foreign exchange (FX) reserves were at around USD 618 billion at the end of FY 2021-22, and despite a drawdown, FX reserves were at a healthy USD 578 billion (as at March 31, 2023). The second half of FY 2022-23 presented a better atmosphere for USD/INR as it moved in a relatively narrow range of 81-83, with support coming from correction in USD in the global markets and a more comforting CAD scenario.

RETAIL BANKING

The Retail business in Indias banking sector witnessed robust growth during the year under review, as the industry strongly bounced back post COVID-19 related slowdown. Official data indicates that private final consumption expenditure increased by around 8% inFY 2022-23 as compared with FY 2021-22. This aided an 18.5% growth in Retail Loans for the Banking Industry (Source: RBI Sectoral Deployment of Credit for February 2023 published on March 31, 2023).

The share of YES BANKs retail advances increased to 45% in FY 2022-23 from 24% in FY 2019-20, and the share of CASA + Retail Term Deposits stood at ~59% of total deposits. The Bank performed well across deposits and retail asset products and continued to provide personalised banking solutions.

Branch Banking

Enhanced retail liability mobilisation and an ongoing investment in branch network resulted in 32% growth in the liability book of branch banking. A strategic focus on mass affluent customers and SMEs in Metro Cities & Urban Markets yielded better results in high value acquisition and led to growth in the current account book.

The liability book growth in the previous year was achieved in the backdrop of a) system-wide significant liquidity tightening b) sharp rise in interest rates, and c) heightened competitive intensity in deposits. The growth of 10.3% in deposits was a tad higher than the industry. The Banks Retail, SME and Mid-Corporates advances, grew better vis-a-vis the overall market. However, our overall loan growth was curtailed at 12.3% owing to a degrowth in Corporate Loans.

The Current Account book in Metro Cities & Urban Markets grew 55% Y-O-Y.

The SME focus was also visible with 94% Y-O-Y growth in Trade & Forex business. In Current Account segment, we saw a continued momentum in higher new acquisition value.

Branch-led retail NTB (New-to-Bank) customer acquisition recorded 39% Y-O-Y growth. The NTBs acquired by Branch Banking hit a quarterly run rate of more than 3.5 lakh customers by the end of Q4FY23.

During FY 2022-23, YES BANK added 83 branches and expanded its geographical footprint to 1,192 branches and 150 Business Correspondent Banking Outlets spread across 700+ locations with 1,301 ATMs and Bunch Note Acceptor/Recycler.

The Bank also continues to embrace the ever-evolving digital landscape with cutting-edge technology to optimally acquire and provide superior customer service. As a part of its drive to take the Bank to the customer, the Branch Banking staff stepped up the adoption of AI-based YES Robot to provide its customers with retail liability and asset-based solutions as an employee assisted advisory tool.

Digital Banking

YES BANK has invested significantly in new-age and digital technologies to offer a superior customer experience. To augment its offering, the Bank continues to partner with various FinTechs and corporates. Bank continues to be a leading player in new-age digital payments, including UPI, AEPS, NEFT, IMPS and NACH at 38.3%, 22.8%, 17.7%, 11.2% and 6.3% market share, respectively. YES BANK processes nearly every 3rd digital payment transaction in the country, which hovers between 10-12 billion on a monthly basis. To grow its digital volumes further and build resilience, the Bank has implemented cloud-native UPI, IMPS processors and alternate AEPS processors.

During the year, the Bank launched solutions around new payment aggregator and payment gateway guidelines (PAPG Guidelines) which limits only the PA licence holder to participate in aggregation services. It solves the collection and payout problems for the network partners who do not participate as PA in the ecosystem. Under this (Bank as PA BAPA), 59 partners went live and transactions valued at Rs 3,000+ crore were processed.

Over the decade-long journey of YES Money, the Bank has onboarded over ten lakh outlets which has aided its customers with simple banking transactions such as domestic money transfer and Aadhaar-based cash withdrawals.

Debit Cards

YES BANK has a complete suite of Debit Card products across three networks (Mastercard, Visa and RuPay), which cater to the varied needs of its customers. Segmented across its flagship customers, YES Private, YES First, YES Premia and YES Prosperity, these debit cards are designed and customised to fit the specific needs of customers. These cards offer unique benefits, including reward points on their spends, NFC-enabled contactless payments, complimentary lounge access at domestic airports (on select Debit Cards), MasterCard golf lessons on YES First and YES Premia range of debit cards. Customers have also been provided with YES InControl, which allows them to manage their card spending and control card security parameters.

The Bank has also created its own brand of seven E-series Debit Cards to cater to varied customer segments.

YES Private Debit Card was launched in association with Mastercard for Banks Ultra High Networth Individual (UHNI) customers. This is the first Pacific to be launched on the Mastercard World Elite platform and aims to bring forth best-in-class lifestyle experiences with unparalleled features and privileges for our private banking customers. In FY 2022-23, the Bank added 12.1 lakh new Debit Cards, increasing its overall card base to 44.2 lakh.

Spectrum Banking

Spectrum Banking is the Banks new-age channel that manages the entire Customer Life Cycle ranging from Acquisition, Onboarding, Relationship Management, Customer Value Management, Activation, Retention and Service across the entire suite of retail products (namely, liabilities, retail assets, business banking, credit cards, merchants and third-party products) virtually through the spectrum of voice, chat and email. This channel manages relationships virtually across a base of ten lakh liability customers and is one of the fastest growing channels for the Bank.

Acquisition, Onboarding and Customer Value Management of Liability Customers:

Remotely managing relationships of YES First, YES First Business, YES Premia, YES Prosperity, Corporate Salary Account and Global Indian Banking (GIB) customers Liability Acquisition and Virtual Relationship Management processes have been ISO 9001:2015 recertified during the previous financial year Acquisition and Onboarding of retail assets, business banking, POS merchant and credit card customers, in addition to virtual relationship management of POS and business banking customers Deepening Credit Card customer relationships by offering term products such as EMIs and unsecured loans, and increasing stickiness by offering card upgrades, limit enhancements and card protection plan Cross-selling of Insurance, Investment, Trade Forex and Cash Management products to existing customers of the Bank

YES Private

YES Private is the Banks full-stack banking solutions client program curated especially for Ultra High Net Worth Individuals (UHNI). The program is designed to offer a full suite of banking and enterprise solutions for the UHNI clients business, wealth management, succession planning and lifestyle needs through a team of relationship and product specialists.

YES Private is a “by-invite only” program for clients who maintain average liabilities balances of Rs 3 crore or a total relationship value of Rs 5 crore at a family level.

In FY 2022-23, the YES Private program grew significantly from 250 customers to 1,500 customers, with a total book size of Rs 3,400 crore, including Liabilities and AUM.

During the year, YES Private launched Asia-Pacifics first World Elite Debit Card on Mastercard platform for its clients.

WORLD ELITE IS THE TOP-TIER CARD PLATFORM BY MASTERCARD EQUIPPED WITH BEST-IN-CLASS LIFESTYLE BENEFITS FOR UHNIs INCLUDING GLOBAL CONCIERGE SERVICES, AIRPORT LOUNGE ACCESS IN INDIA AND ABROAD, SPECIAL OFFERS AT WORLDS LEADING HOTELS AND RESORTS, WORLDWIDE GOLF PRIVILEGES, AND BEST SEATS FOR EVENTS AND CONCERTS, AMONG OTHERS.

YES First and YES First Business

YES First and YES First Business are the Banks flagship wealth management and business banking programs curated for HNIs for their personal and business banking needs. These specialised programs are imbibed with a comprehensive customer-centric approach and offer curated product offerings and services, with a host of lifestyle benefits, wealth management and exquisite service solutions to provide a delightful experience to our customers.

To enhance wealth management value proposition during the year, our YES First and YES First Business programs focussed on a plethora of initiatives. These ranged from conducting small format events with industry experts to high profile webinars involving some of the most respected names in the Wealth Management industry. The topics for these events included wealth planning and investments and insightful coverage on key market and economic events. For YES First Business customers, a bespoke engagement format covering currency markets, hedging tools and transaction banking was introduced.

Aligned with a continuous commitment to provide superlative service experience to our affluent customers, YES FIRST Direct, a one-stop virtual branch was launched. Powered by Aadhaar Card, YES FIRST Direct empowers its customers to carry out financial as well as non-financial transactions with ease from the comforts of their home or office. YES FIRST Direct is designed to service all the customer requests, queries or concerns. The programs also pioneered in personalising its communications on informing the key contact points to customers through curated videos and downloadable contact cards for easy reference.

YES Premia

YES Premia offers customised premium banking solutions to the mass affluent segment with an emphasis on making banking seamless and enjoyable for our customers. The product has been carefully curated to provide customised banking solutions complementing the lifestyles and expectations of varied customer segments. YES Premia provides its customers with a ‘Truly Yours proposition, offering a wide range of targeted products, services, benefits and partnerships. In FY 2022-23, YES Premia saw a more than 40% addition in customers and its liability book.

YES Prosperity

YES Prosperity is the Banks mass retail programme, offering services for customers individual banking needs. YES Prosperity is a feature-packed exclusive segmented savings account proposition for senior citizens, women and regular customers of the Bank. Furthermore, for business clients, it offers current account variants such as Edge Business, Prime Business and Exclusive Business, a first-of-its-kind three-tier product suite with an auto-upgrade and auto-downgrade facility to ensure the rightproductfitfor every stage of the business lifecycle.

YES Family

YES Family is a feature-packed proposition that offers wide-ranging services and rewards to meet the Packed with unique financial benefits and exclusive offerings, YES Family has been thoughtfully curated to make banking more convenient. It offers attractive products and solutions and rewards usage of cards and digital platforms. The program enables customers to care for the financial and overall well-being of every person in the family. The proposition is available across YES First, YES Premia and YES Prosperity program.

Global Indian Banking

YES BANKs Global Indian Banking (GIB) program is a power-packed customised offering providing multiple avenues for non-resident Indians (NRIs) to curate and manage wealth across product categories through in-person and digital fulfilment models. This comprehensive product is complemented by a multi-channel servicing capability and benefits extend beyond banking.

The GIB program offers comprehensive and superior experiential banking services for NRIs and Persons of Indian origin (PIOs). It provides financial solutions to NRIs, including deposits, remittances and wealth management products. This liability product suite comprises savings, fixed and recurring deposit offerings denominated in INR, and foreign currency (FCY) denominated fixed deposits in eight global currencies. The Bank offers deposit-linked structured products (premium rupee/FCY plans) that provide higher returns to NRIs on their deposits, while availing maturity proceeds in INR or FCY. Additionally, the Bank also offers best-in-class NRI FX rates to credit NRI accounts held with the Bank. The Portfolio Investment Scheme (PIS) in the program enables customers to invest in Indias equity markets. To fulfil their wealth enhancement and safety goals, the Bank also offers a host of investment and insurance solutions to NRIs for themselves and also for their families in India.

In FY 2022-23, the Banks GIB proposition witnessed a host of enhancements, including an acceleration of its digital interface to allowdigitalcustomeronboarding, retail banking assets book Re-KYC via digital platform, RM assisted deposit booking and customer servicing.

For more value-added services, the Bank introduced a curated product offering for NRIs and foreign nationals through its International Financial Services Centre (IFSC) Banking Unit (IBU). The product offers savings and fixed deposit accounts across three foreign currencies with the key proposition of short-term liquidity at higher interest rates. This provides customers with high-interest deposit options versus the minimal rates . offeredintheir host country

Retail Banking Assets

The Banks customers can select from a wide range of retail loan products which include home loans, affordable home loans, car loans, two-wheeler loans, commercial vehicle loans, construction equipment loans, loans against securities, gold loans, personal loans, secured business loans, health care finance, printing equipment finance, and working capital finance under a single roof. A diversified all products of the Bank witnessed the share of Retail Advances increasing to 45.2% in FY 2022-23 vis-a-vis 36.0% in FY 2021-22. The Bank has seen strong growth in all its retail business groups. It has preferred financing agreements with leading automobile manufacturers of cars, commercial vehicles and construction equipment, thereby enabling access to the wholesale and retail businesses of manufacturers and dealers across the country. The Bank offers its retail products at 1,004 branches across 579 locations in India.

In FY 2021-22, the Bank enhanced its digital lending capabilities with the ‘loan in seconds platform as well as front-end automation initiatives using YES Robot, to provide customers with shorter response time and drive higher productivity. This has enabled the Bank to enhance new sanctions/disbursements which stood at Rs 48,000 crore in FY 2022-23. With an eye on future retail-led growth ambitions and the need for a strong technology backbone, the Bank invested in Salesforce the worlds leading CRM Platform to build a next-generation cloud-based loan origination system that enables concurrent processing, real-time credit decisions and industry-best turnaround time.

The Bank has a diversified retail asset book which is built around analytics-based collection scorecards which augments our field force performance and enhances collection cost efficiencies. The Banks collection FY 2022-23, which is above pre-COVID levels.

Rural and Inclusive Banking

The Rural and Inclusive Banking division of the Bank caters to the financial requirements of rural India through its basket of offerings targeting the entire agri value chain and also the underserved and unserved. This division is also responsible for complying with the requirements of lending to the Priority Sector. The division houses three Business Units, as stated below:

a. Rural Banking Assets

The Rural Banking Assets unit addresses the financial requirements of Indian farmers for crop production and ancillary activities through the issue of Kisan Credit Cards. To cater to specific needs of the farmers across specialised agri clusters, the unit offers its flagship crop loan product under different variants. It also takes care of the farm mechanisation needs of progressive farmers by financing purchase of tractors as the primary asset class, along with harvesters and agri implements. The unit also finances small business entities, self-employed professionals and entrepreneurs in rural areas for their specific business requirements. Currently, it caters to farmers requirements in eleven states of India, with dedicated manpower present in these geographies. As at March 31, 2023, outstanding loans were offered to more than 45,000 farmers under the above categories.

b. Inclusive & Social Banking

In line with its commitment towards sustainable ‘inclusive growth in the rural and semi urban segment, YES BANK has always focussed on catalytic innovations and key partnerships to create and promote viable business models, while also providing ‘access to finance to its bottom-of-the-pyramid customers. It a two-pronged strategy involving Inclusive & Social Banking (ISB) and Microfinance Institutions Group (MFIG) for the implementation of various financial inclusion initiatives, albeit in a profitable manner. Further, to provide comprehensive services, the Bank has aligned its ISB and MFIG businesses with its rural branches and it has also broadened the distribution channel through Business Correspondent (BC) branches and BC managed Banking Outlets (BCBOs).

The Bank promotes microfinance as an important asset class within its core business. On the wholesale side, through its MFIG unit, the Bank extends Term Loans to MicroFinance Institutions (MFIs) for on-lending, provides cash management services and caters to other banking and transactional requirements. On the retail side, the Banks ISB unit, through its flagship group-lending program ‘YES Livelihood Enhancement Action Program (YES LEAP), provides financial services to women microfinance borrowers through Business Correspondents, with 100% of our customers being women.

As at March 31, 2023, the Bank had an active women customer base of 7.6 lakh. And since its inception, a cumulative disbursement of over Rs 14,600 crore has been made through the programme, reaching out to over 34 lakh families till date. Further, to help its customers during unfortunate times, the Bank offers optional insurance products which includes a customised loan cover life insurance product and a new tailored hospital cash product for rural and semi urban segment to help them reduce their out-of-pocket hospitalisation expenses. The Bank currently has 150 BC Banking Outlets (BCBOs) which enabled the Bank to provide both Asset and Liability solutions to over 32,000 customers in the rural segment.

c. Agribusiness Product Management

Agribusiness Product Management (APM) is the Banks specialised vertical, which houses industry and banking professionals with relevant domain knowledge and skill sets. The team closely interacts with Food and Agri clients to create customised lending propositions for the agri value chain participants including farmers, SMEs and corporates. It facilitates in building of banking opportunities in the agri value chain through suitable financial products, while also mitigating the credit risk. The team is also responsible for ensuring that the Bank meets the regulatory Priority Sector Lending (PSL) norms, in collaboration with the other Business Units that generate PSL assets.

As a part of agri value chain financing, the Bank has created a granular portfolio against the pledging of agri commodities, while also ensuring adequate risk mitigation. Within APM, a specialised team closely monitors the commodity pledge financing portfolio and mitigates the inherent risks through mark-to-market of commodity prices and in-depth data analysis using various tools and techniques. This end-to-end process is carried out on digital platforms to ensure faster customer service and superior experience. As at March 31, 2023, the Bank had a commodity pledge finance portfolio of more than Rs 1,850 crore, with nil delinquencies.

Credit Cards

YES BANKs Credit Card unit is known for its customer-first approach, strong product suite, evolved distribution strategy and superior customer service, complemented by robust risk management systems. With 14.2 lakh credit card-holders, the business continues to scale upwards with 63% Y-O-Y growth and 66% Y-O-Y growth in the outstanding book and spends, respectively.

The Banks current product suite in Credit Cards consists of 18 products across consumers, small and medium-sized enterprise (SME) and commercial cards. In January 2023, the Bank launched a “Build Your Own Card” (BYOC) Credit Card, an innovative concept which offers a unique and an engaging proposition to its customers to build a fully customisable card including giving them the choice of card plastic material, image, perks and offers, among other features. Since its launch, the Bank is already issuing more than 3,000 BYOC Credit Cards every month.

The Banks fully digital customer onboarding platform, clubbed with a real-time credit card approval process and virtual card issuance (on a select base), provides the customers with card details in less than 10 minutes of receiving the application. More than 81% of new credit card issuances in March 2023 were processed digitally. In December 2022, the Bank also introduced a digital co-origination journey with a Savings Account bundled with credit card in December 2022, and sourced more than 6,000 such Savings Accounts in Q4 FY 2022-23.

Today, the Bank has reduced its lifetime-free Credit cards to just 30% of the total cards issued. Alongside a robust distribution strategy, YES BANK Credit Cards focus on incremental customer engagement backed by strong alliances and partnerships, resulting in higher card spending, activation rates and a growing wallet size.

Merchant Acquiring Services

YES BANK is one of Indias leading Merchant Acquiring Services provider, with a best-in-class product suite backed by high service standards and a robust technological infrastructure. The Merchant Acquiring Services focusses on managing merchant relationships via a dedicated Relationship Officer in the field and also through Virtual Relationship Officers, thus continuously working towards developing an overall engagement. Merchant Acquiring Services cater to more than 1.5 lakh merchant establishments and currently deploy close to 35,000 payment acceptance devices on a quarterly basis. Close to 80% of the current deployments are processed digitally via the YES Insta app.

Merchant Acquiring Services offer state-of-the-art Android-based point of sale (POS) devices, SoftPOS solution, same-day and holiday settlements, and an array of other value-added services, including SMS Pay, EMI, dynamic currency conversions (DCC) and best-in-class solutions for BQR/UPI payments like BQR Standee and BQR Soundbox. The Bank continually invests in new products, enhanced services and advanced digital processes.

Fintech Partnerships

YES BANK engages with multiple fintech partners to enable the acquisition of incremental new-to-bank (NTB) customers across liabilities, assets and credit cards. By collaborating with select Fintech Partners, the Bank is building a sustainable and scalable low-cost acquisition model. Selecting a Fintech Partner is a well-thought-out strategy with a segmental-based focus to ensure differentiated product offerings and value-creating propositions. By leveraging unique propositions with the Fintech Partners superior UI/UX and a robust application programming interface (API)-based technology stack, YES BANK is also able to offer and cross-sell Banks relevant product and services.

SME Banking

The Banks Small & Micro Enterprises Banking (SME) business caters to all the financial requirements the SME ecosystem. There are dedicated Relationship Managers for business origination and relationship deepening across trade, forex, cross-selling of CASA, financing individual / commercial asset requirements through coverage in over 700 branches. The team constitutes Relationship Managers and Product Specialists who are nuanced from the industry. The segment provides solutions-oriented financial planning for their working capital and long-term capital expansion requirement. A majority of this business originates from internal channels with parameterised and discretionary lending, thereby enabling faster credit decisioning. This allows the Bank to calibrate its reach and optimise the cost of delivery to the client.

External channels of sourcing are initiated to have an outreach for incremental market share. Dedicated efforts are taken in building alliances in Supply Chain Finance, Co-lending has been undertaken with an overall four-pronged strategy to evaluate the policy framework, sourcing mechanics, and digital delivery to fulfilment.

With the shift towards digital transactions, the Bank has curated a digital lending platform, especially for SMEs, to sanction loans by data triangulation which is effected with the consent of the borrower. This leads to faster decision-making and optimises effective communication with the client about his borrowing requirements.

The Banks industry leading solution, YES SME, provides a single interface for all transactional banking needs of SMEs, including cash flow management, credit limits and utilisation, certain credit document submission, and bulk payments, among others.

The Bank has successfully implemented E-Sign and E-Stamp facilities, which supports digital execution of loan agreements. This leads to faster loan fulfilment and provides a seamless customer experience.

Our Digital & Analytics solutions are improving productivity and enhancing customer experience with:

The Bank has a robust expertise in trade and forex management. With a stringent focus on customer engagement for increasing penetration on ‘Smart Trade application. Smart Trade/FX online are secure platforms for initiating online trade/FX transactions, through which customers can place a transaction request, which will automatically flow to the Bank for digital processing.

In line with the Banks strategy to institutionalise its ‘Knowledge Banking approach, the Bank has partnered and inked MoUs with various trade and industry associations including the Government-sponsored bodies. The aim behind this is to conduct banking knowledge events and SME cluster development programmes in RBI-defined carnivals and to provide easy and inclusive financial assistance, and ensuring that customers have access to best-in-class schemes and benefits.

The Bank continues to explore targeted products aimed at green financing, which includes: Offering loansfor the adoption of rooftop solar amongst SMEs; Offering bank guarantee and commercial vehicle financing for urban waste collectors and processors;

Financing equipment manufacturers of Effluent Treatment Plant/Sewage Treatment Plants; and Supporting the Electric Vehicle ecosystem by financing auto ancillaries/charging infrastructure players.

This differentiated positioning, along with customised solutions, a dedicated relationship team, knowledge- banking experts and an extensive network helps the Bank deliver an unmatched one-stop service to SMEs, and address their end-to-end requirements.

WHOLESALE BANKING

As the Bank accelerates its transformational journey, its strategic focus in maintaining sustainable growth is aimed at developing and driving liability franchises and strengthening its asset business, along with strong governance and compliance as well as prudent risk management. To further develop these objectives, the Wholesale Banking Group continues to play a key and pivotal role for the Bank.

Large Corporates

YES BANKs Large Corporates business division provides comprehensive financial and risk management solutions to large corporate clients. The Bank offers comprehensive client-focussed services encompassing:

Working capital finance Capex loans Project finance Transaction banking products Trade finance

Cash management services

Debt capital markets

Treasury services (foreign exchange risk management) Investment banking (M&A advisory, fund raising) Foreign currency loans including ECBs Overseas financing (via IBU in GIFT City) Liquidity management solutions

With the theme of Ecosystem Banking and the Banks service-centric approach, it also focusses on the entire ecosystem of its clients by catering to dealers, vendors and customers of corporate clients.

The Bank is committed to making continuous improvement in its service level, risk management and product portfolio through research, benchmarking and Over client orientation with a key objective of strengthening its existing relationships and gaining market share.

The Banks Product-related teams have knowledgeof The key sectors such as roads, renewable energy, ports, to refineries, facilitate underwriting of exposures across business segments. These Product teams also engage with key stakeholders to deepen their understanding of these sectors, market conditions and industry developments, and help devise sector-wise strategies. This distinctive approach also translates into stronger relationships with clients in knowledge-driven sectors such as life sciences & healthcare, information technology, food & agribusiness, manufacturing, infrastructure, hospitality and education.

With the goal of offering a one-stop solution disbursement to its corporate clients, the Large Corporates Group also works in partnership with its Retail Banking team to offer meaningful personal banking services such as Savings Accounts, Credit Cards and Retail Assets to the employees of its Large Corporate clients.

Institutional and Government Banking

YES BANKs Institutional and Government Banking team is divided into seven key segments: Government Banking Multinational Corporate Banking Indian Financial Institutions Banking International Banking Corporate & Government Advisory Food & Agribusiness Strategic Advisory and Research International Banking Unit

a) Government Banking

This Group provides government entities, financial institutions and multinational companies with comprehensive client-focussed services. The Banks services to this segment encompasses liquidity management solutions, treasury risk management solutions, transaction banking products, trade finance and cash management services, supply chain finance, working capital finance and term loans. The Banks Government Banking segment addresses financial and banking needs of the Central and State Governments and their affiliates. years, the Bank has provided financial and advisory services to ministries under the Union Government, State Government, Central and State Public Sector Undertakings, Boards and other affiliates. delivers innovative, structured and comprehensive solutions to this segment, and has accomplished several landmark transactions with Maharatnas, Navratnas, Mini-Ratnas and other apex institutions.

The Bank has deployed innovative collection and payment mechanisms with customised digital solutions for State Development and Procurement Agencies. It has also provided support to educational, religious and sporting institutions across India via its unique transaction banking offerings aimed at streamlining working capital management. The Bank partners with the State Governments through the public financial management system mode of payment to ensure . seamless tracking of last-mile beneficiary

b) Multinational Corporate Banking

The Banks Multinational Corporate Banking segment focusses on emerging as a preferred host country and payments bank to global counterparts. As a result, an increasing number of institutions have elected to utilise the Banks network for their India-linked businesses. The Bank has established strong relationships with its multinational corporates across key trade corridors, increasing its share of India-bound remittances.

c) Indian Financial Institutions Banking

The Indian Financial Institutions Banking segment offers correspondent banking solutions to domestic banks and various financial institutions. The Bank has successfully deployed API banking, a technology that has emerged as a key service, to integrate and streamline the transaction processing cycle, and offer real-time instant banking facilities to cooperative banks, mutual funds, stock brokers, non-banking finance companies (NBFCs), payment aggregators, regulated payment operators and other financial institutions.

The Bank has engaged with the National Bank for Agriculture and Rural Development (NABARD), the Small Industries Development Bank of India (SIDBI), the Export Import Bank of India (EXIM Bank) and the National Housing Bank (NHB) to avail refinance. It also connects with foreign banks and overseas branches of Indian banks to avail foreign currency borrowings and trade credit.

d) International Banking

The International Banking segment maintains relationships with an extensive network of international banks, financial institutions and exchange houses. It provides a complete suite of products and solutions, including trade finance, treasury services, investment banking solutions, remittance solutions, financial advisory and global Indian banking, for its partner institutions and internal stakeholders. It delivers unique and first-to-market its global alliances.

e) Corporate and Government Advisory Business

To further the Banks commitment towards Indias holistic and inclusive growth, the Corporate and Government Advisory segment works across the emerging sectors of Indias economy by executing knowledge and advisory mandates of social and economic importance. The Group leverages its in-depth sectoral expertise, research skills and apex-level relationship capital across government and industry ecosystems to assist clients, including Central and State governments, multi-lateral bodies, industry chambers and private sector players, in their development and growth agenda. Our focussed sector-oriented approaches such as Smart Cities, e-mobility, etc. has created new banking opportunities for us and helped in deepening our relationships with key customer segments.

f) Food and Agri Business Strategic Advisory Research

YES BANKs specialised Food and Agribusiness Strategic Advisory and Research (FASAR) unit houses industry specialists with sectoral knowledge and experience in the food and agribusiness domain. FASAR rolls out strategic initiatives and generates banking opportunities on the back of knowledge banking services and focusses on exploring innovative banking opportunities, acquiring NTB clients and consolidating banking relationships with its existing clients. The unit works closely with corporates, SMEs, multinationals and Central and State Governments, and has executed multiple mandates on project, strategic and policy advisories across diverse sub-sectoral and thematic areas. FASAR also publishes reports and research papers regularly on key trends and developments in the food and agriculture sector.

g) International Banking Unit

YES BANK was the first in India to commence operations at the IFSC in GIFT City, Gujarat, in October 2015. Customer advances and investments at the Banks IBU stood at approximately USD 976 million on March 31, 2023. IBU provides comprehensive solutions to the Banks clients to meet their foreign currency banking requirements in cross-border trade offerings, external commercial borrowings and foreign currency loan syndications. In line with the requirements of the

International Financial Services Centres Authority (IFSCA), the Bank has formed a governing body comprising its senior executives to oversee the overall affairs of the IBU.

Mid Corporates

The Mid Corporates team focusses on corporates with a turnover between Rs 100 crore and Rs 1,500 crore.

The segment lives up to its philosophy of supporting local corporates by being closer to its customers, developing a thorough understanding of their banking needs and delivering tailored solutions across an entire spectrum of banking services. Mid Corporate Segments foundation pillars are its regional presence, granular asset and liability book, robust risk management, strong digital penetration, structured cash and trade solutions and sustainable growth.

Mid Corporate Segment leverages its USP of “Knowledge Banking” to cater to the requirements of focus sectors, including Auto Components, Food& Agri-processing, Gems & Jewellery, Media & Entertainment, Pharmaceuticals, Specialty Chemicals, and New Age & Technology businesses. It offers a customised suite of financial products including Term Loans, Funded & Non-Funded Working Capital Facilities, Cash Management Solutions, API Banking, Digital Banking and Trade & Treasury Products by leveraging cutting-edge technologies.

The Mid Corporate segment is on a growth path through its two-pronged approach of acquiring New-to-Bank (NTB) clients and deepening its existing relationships. The team currently runs its operations from 37 locations, and to further strengthen its regional coverage, it is working on adding 10 new locations in FY 2023-24. The team will continue to build this portfolio with a stringent focus on Cross-Sell through synergies with Transaction Banking, Digital Banking, YES Securities, FASAR, Treasury and Branch Banking.

The Mid Corporate segment is deeply entrenched in Indias New-Age Entrepreneurship ecosystem through its bespoke digital solutions, incubation and networking platforms provided to E-Commerce, Fintech, and Agritech businesses. The Bank has a dedicated team providing innovative banking solutions to cater to the unique requirements of start-ups. Over 60% of the unicorns and 1,000+ other top start-ups in India have placed their trust with YES BANK. The team works in unison with Digital Banking, Transaction Banking, Liability Products, Food & Agri Advisory and Retail Banking teams.

Transaction Banking Group

The Transaction Banking Group (TBG) at YES BANK is a specialised product group offering trade finance, cash management and supply chain financing services to corporates, governments and financial institutions. TBG also engages with strategic business influencers to provide customised solutions to them and to their clients through its B2B2C approach.

YES Transact is TBGs comprehensive product suite that caters to the working capital and liquidity management requirements of businesses across sectors and to a spectrum of retail and wholesale client segments. Its product suite includes:

Cash management services for managing receivables and payables Customised and innovative digital solutions, including market-leading API banking solutions Digital solutions for correspondent banking and NBFCs Specialised products and solutions for government entities, including Central and State bodies Fiduciary services, e.g., escrow, nodal and RERA Capital market-related products, including settlement and custodian services Curated solutions for trusts, associations, societies and clubs (TASC) Trade finance, e.g., letters of credit, bank guarantees, export and import credit, and remittances

Structured trade and supply chain solutions including digitisation initiatives and fintech engagements Foreign exchange services, e.g., cross-border remittances for exchange houses and authorised dealers and foreign currency notes Bullion sales and gold metal loans

The TBG leverages its product and technology expertise to offer innovative digital solutions by designing, developing and co-creating products with corporate clients, fintech/technology partners, banks and exchange houses. The group effectively drives digitisation in the entire financial supply chain of businesses across sectors, and leverages its flagship API banking, fintech partnerships and product knowledge base through its product and sales teams.

The group also manages Internet Banking and API channels for its corporate clients. The API Banking solution, which was introduced in September 2015, today provides 450+ API-related services. TBGs supply chain unit works with its strategic corporate clients to harness their supply chain linkages and provide critical liquidity solutions to their SME partners. These solutions are provided by leveraging cutting-edge technology, including artificial intelligence (AI), blockchain and API banking. The group also offers the ‘YES Connect platform, an API marketplace that brings together banking (products and services offered by the Bank) and beyond banking (solutions from third-party partners) solutions in a simplified manner.

TBG also has a specialised and niche vertical for corporate client management, which is an exclusive service-oriented unit managing implementation and client service activities for all transaction banking products and solutions. This unit works on a ‘phygital model to provide a superior post-sales customer experience that creates heightened customer stickiness through its differentiated service proposition. This is now an ISO certified unit making it the first one from the TBG stable.

Financial Markets

The financial markets segment offers a full range of products and services to large corporates, SMEs, government, retail and institutional clients. Whether it is providing comprehensive advisory services, macroeconomic research or debt capital market services, its focus continues to be on maintaining client relationships and ensuring their growth. The Bank currently has over 100 professionals serving these needs of clients at various branches across the country.

FX Sales: The Bank provides customised solutions for FX (foreign exchange) risk management to more than 25,000 clients pan India, including large and mid-sized corporates, PSUs, MNCs, banks and private equity funds. The Banks well-developed retail franchise for FX business caters to SMEs, HNIs and NRIs, among others. The Bank provides spot and derivative products for efficient hedging of foreign currency and interest rate exposures for its institutional, corporate, SME and retail customers.

The segment offers products such as FX advisory for trade flows, foreign direct investments (FDIs), capital flows, external commercial borrowing (ECBs), American Depositary Receipts (ADRs) and hedging solutions for currency and interest rate exposures. Each account has a dedicated Treasury Sales Manager that provides key personal services such as timely market insights and sectoral expertise. Through IFSC in GIFT City, Gujarat, the Bank also provides electronic execution in various forms and hedging solutions to clients outside India.

Primary Dealership:

YES BANK is one of the 21 Primary Dealers (PDs) designated by RBI to actively trade, underwrite and bid for government securities, T-Bills and State Government Bonds in auctions, providing a complete suite of sovereign debt. The Bank has dedicated sales personnel for dealing with mutual funds, insurance companies, foreign portfolio investors (FPIs), cooperative banks, provident funds and retail customers.

Debt Capital Market (DCM):

This business originates and distributes onshore non-convertible debentures (NCDs), commercial papers and other structured finance products. TheBanksclienteleinthissegment market knowledge and has applied comprises large and mid-market corporates, PSUs, central and state government entities and NBFCs. On the distribution front, the DCM desk has developed deeply entrenched relationships across various investor segments, including mutual funds, insurance companies, provident and pension funds, FPIs, banks, private wealth managers and NBFCs. It has successfully executed deals ranging from vanilla transactions to highly structured debt solutions, including a renewable asset pooling structure, securitisation of infrastructure assets, lease rental discounting and NCDs issued by InvITs (Infrastruture Investment Trusts). The Banks DCM team has consistently been ranked in the prestigious league table rankings and has also received several awards and accolades over the years.

Balance Sheet Management Group (BSMG):

The Banks BSMG team is the custodian of its cash, liquid assets and government securities portfolio. It manages day-to-day liquidity within the centralised treasury function with governance oversight by the Asset Liability Management Committee (ALCO). It also manages the Banks investments in securities and is responsible for meeting statutory reserve requirements like Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Liquidity Coverage Ratio (LCR) and Net Stable Funding Ration (NSFR). The BSMG team is responsible for management of liquidity risk and interest rate risk exposures within the Banks balance sheet. It also provides guidance on funds transfer pricing based on movement of funds within the Bank, which is an essential input for pricing of all the asset and liabilities products offered to its customers.

Bullion: YES BANK imports bullion on a back-to-back consignment basis to meet outright purchase and gold loan requirements of bullion dealers and jewellery manufacturers (both domestic and export purpose). The Bank has emerged as a dominant player in the Indian bullion market and established itself among the top three bullion importing banks in India. Today, it is one of the leading banks that successfully meets the demand of small and medium-sized manufacturers.

Stressed Asset Management

YES BANKs Stressed Asset Management (‘SAM) team leads management of distressed and non-performing assets (NPAs) originating from the Banks corporate segments. The Group provides effective solutions for resolution of these assets by leveraging its understanding in rehabilitation, regulatory and recovery understanding. Over the past three years, the team has the gained significant same in resolution of stressed cases of varying degrees of nuance and complexity. During the financial year, the SAM team continues to remain ISO 9001:2015 certified, reiterating its consistency in high level of standards and processes followed by the team.

The SAM team devises multi-pronged resolution strategies, including: operational and financial restructuring, identifying strategic investors for the takeover of stressed assets, resolving issues through the insolvency and bankruptcy framework, negotiating with borrowers for one-time settlements, recovering security interest by enforcing the Securitisation Act, and selling NPAs to asset reconstruction companies (ARCs) or other investors to optimise recovery outcomes (both in terms of recovery value, as well as timelines for recovery).

In addition, businesses of select stressed borrowers which was adversely impacted due to the COVID-19 pandemic were also provided with adequate support to help them revive their operations and turnaround their business and create value for all their stakeholders.

During FY 2022-23, the team successfully completed the assignment of NPAs totalling ~ Rs 48,000 crore of gross outstanding as at March 31, 2022 to J.C. Flowers Asset Reconstruction Private Limited (JC Flowers ARC). This is by far the single-largest transaction of the sale of NPAs in the Indian Banking System.

SUPPORT FUNCTIONS

Human Capital Management

Implementing a “people-first” culture truly works towards the sustainable competitive advantage for any bank. It not only helps attract and retain the best talent, but also drives more equitable outcomes. At YES BANK, we enjoy a culture that promotes meritocracy and career enhancement. The Bank has a total of 27,517 employees as at March 31, 2023 of which 3,171 employees were added in FY 2022-23. YES BANKs 5C engagement model (culture, communication, connect, career and care) provides a consistent and enhanced employee experience. To make the world of work equitable, dynamic and more fulfilling, the YES School of Banking focusses on building skills for the future through sustained learning initiatives with the aim of building their capacity and capabilities.

The Bank offers developmental initiatives for its top and senior management leaders, including the APEX Leadership Program, the Leadership Excellence Acceleration Program (LEAP), and the Advanced Leadership Program (ALP). These initiatives focus on identification and development of key leadership competencies. To create an organisation that is diverse, equitable and inclusive, the Banks ‘EVEolution initiative focusses on upskilling and developing its women executives. In line with its responsible banking objectives and to ensure that employees have a say in making YES BANK a trusted and successful institution, the Bank undertook the 2nd edition of the ‘Voice of YES Employee Survey in FY 2022-23. Furthermore, to build a steady stream of high-quality talent, the Bank has implemented innovative ‘train and hire programmes in FY 2022-23, including the YES Professional Banker, the YES Force and the YES Graduate programmes. The Bank continues to invest in hiring top-end, young talent from premier educational institutions through its flagship YES Professional Entrepreneurship program.

Risk Management

The Banks long-term financial security and success is built on its risk management architecture. The Banks risk management is based on three lines of defence: (a) business units, (b) independent control functions, and (c) and internal audit. Further, the Banks Board of Directors have the overall responsibility of risk management, with the risk management architecture being overseen by the Risk Management Committee (RMC) of the Board. Additionally, risk management is undertaken by four Board-level committees for respective risks, wherein risk assessment and management is undertaken within the Banks Board-approved risk architecture.

The Bank is exposed to three Pillar 1 risks in the course of its business: credit risk, market risk, and operational risk. With the evolving banking landscape, the Bank is also exposed to Pillar 2 risks - liquidity risk, interest rate risk in banking book, and cyber security risk. These risks are also critical as they not only have a bearing on the Banks financial strength and operations, but also on its reputation. The Bank is also exposed to many other risk parameters. A detailed description of various risks faced by the Bank, their respective governance framework, management and mitigation strategies, and their implication to the Bank is presented on Page 58.

The Bank has Board-approved risk policies that define its risk framework. The RMC and the Board monitors the compliance of various risk parameters and risk exposures on a periodic basis. The RMC also ensures that frameworks are established for assessing and managing various risks faced by the Bank. The RMC ensures that risk the Banks framework is adequate and appropriate for changing business and economic conditions, structure and needs of the Bank and is well within its risk appetite.

Further, the Bank has a structured strategy assessment and management framework in the Internal Capital Adequacy Assessment Process (ICAAP) to identify, assess and manage the risks that may have a material adverse impact on its business strategy, financial position and capital adequacy. The ICAAP framework is guided by the Board-approved ICAAP policy. It also has in place a Board-approved risk appetite statement for key risks identified under ICAAP. There are internal policies and processes to ensure that the Bank operates within its risk appetite thresholds.

The Bank has also implemented a Board-approved stress testing framework that forms an integral part of ICAAP and risk assessment. Stress testing involves the use of various techniques to assess the Banks potential vulnerability to extreme, but plausible, stressed business conditions. The Bank evaluates the impact of various stress testing scenarios on account of various Pillar I and Pillar II risk exposures.

Internal Audit

The Banks Internal Audit Department (IAD), which is ISO 9001:2015 certified (Quality Management System), provides an independent and objective assurance and consulting services to add value and improve its risk and control environment. The IAD monitors the adequacy, effectiveness and adherence to internal controls, processes and procedures instituted by the Banks management and extant regulations.

The Internal Audit team reports to the Audit Committee (ACB) of the Board for audit planning, reporting and review, and the Head of the IAD reports directly to the ACB of the Banks Board of Directors. The IAD has unlimited and unrestricted access to all relevant data, systems, personnel and information to achieve its objectives. It is staffed with qualified team members with relevant certifications, all team members are upskilled at frequent intervals.

The IAD has adopted a risk-based approach towards internal auditing, as per regulatory guidelines and internationally established best practices. A risk-based audit plan (RBAP) is prepared annually and is duly approved by the ACB. The IAD audits various businesses, operations, information security/systems and support units as per the RBAP. The IAD prepares a report for each audit, recommends mitigation plans for the risks identified and ensures compliance with all the recommendations. The ACB monitors the progress of the RBAP on a quarterly basis.

The Bank also subjects its operations to concurrent auditing by reputed audit firms to complement its internal auditing function. Concurrent auditing covers core activities, including operations (including credit), financial markets, data centres and branches in compliance with regulatory guidelines. All audit reports are circulated to the relevant management teams and the ACB.

Compliance

Ensuring compliance with regulatory requirements, promoting a culture of compliance among YES BANKers and building trust among all the stakeholders is an overarching consideration at the Bank. The dedicated Compliance Department strives to be at the forefront of regulatory changes and continues to work closely with all the Banks businesses and operations to be compliant with existing and new requirements. To further this objective, the Chief Compliance Officer at the Bank reports directly to the ACB.

The key functions of the Compliance Department align with various RBI guidelines, which includes identifying effective procedures, corresponding controls to support the Banks business divisions and the dissemination of key regulatory updates affecting the Banks various businesses. The Compliance Department also reviews new products and processes from a regulatory compliance perspective, provides guidance on compliance-related matters, conducts compliance reviews and delivers training to employees on different aspects on compliance. In addition, the Bank has also put in place the KYC and Anti-Money Laundering policy approved by the Board and transaction monitoring procedures, as per the regulatory guidelines.

Company Secretarial (CS)

During FY 2022-23, the Banks Company Secretarial Function got certified ISO 9001:2015 for its function & processes based on the key attributes which includes risk-based approach, ability to consistently meet customer and regulatory requirements, standard operating procedures across the business process, monitoring and control mechanism and continual improvement framework.

The Bank is committed to achieving highest standards of Corporate Governance and the dedicated Company Secretarial (CS) Function of the Bank, endeavours to follow the best secretarial practices in order to uphold the governance standards of the Bank. The CS Function is responsible for the Regulatory Compliances under various Laws/Acts/Regulations/

Guidelines/Standards prescribed by SEBI, RBI, MCA and other stakeholders of the Bank.

CS Function being the Board Governance facilitator, plays a critical role in organising and implementing Boards decisions, its Committees and General Meetings. It handles the regulatory correspondence and ensures the fair, prompt, uniform and transparent dissemination of information to the stakeholders through stock exchanges. The designated Company Secretary is the KMP under the Companies Act and reports directly to the MD & CEO & the Chairman of the Board.

Sustainable Finance

The Sustainable Finance (SF) function at YES BANK is responsible for integrating environmental, social and governance (ESG) considerations into the Banks business. It is also responsible for aligning it with the objectives of global and national, sustainability-linked frameworks such as the National Guidelines for Responsible Business Conduct (NGRBC), Sustainable Development Goals (SDGs), the Paris Climate Agreement and the Principles for Responsible Banking (PRB), amongst others. The team works with Sustainability SPOCs (Single Point of Contact) across the Bank to implement its sustainability strategy and achieve its ESG-related targets, as set out by the Sustainability Council (chaired by the MD and CEO). The SF team is also responsible for updating the Board-level Corporate Social Responsibility (CSR) Committee and ESG Committee on the Banks overall ESG performance and progress.

The SF team acts as the custodian of the Banks Environment and Social Policy (ESP) which serves a structured approach to the Bank towards responsible lending. The ESP is an integral part of the Banks Environment and Social Risk Management System (ESMS) which sets out the overarching framework for identification and management of potential and/or existing environment and social (E&S) risks commensurate with the nature and scale of transactions and their potential impacts. Through this policy, the Bank integrates environmental and social risks into its overall credit risk assessment framework.

The team also acts as the custodian of YES BANKs Environmental Management Policy which guides the implementation of bank-wide Environmental Management System (EMS). This EMS is designed to monitor and minimise the negative environmental risks and impacts of the Banks operations by driving continuous improvement in areas such as natural resource conservation, responsible waste management, sustainable supply chain and emissions reduction. In FY 2022-23, the Banks EMS, covered 833 facilities, and has been certified as ISO 14001:2015 compliant for the tenth year in a row.

The SF function plays a key role in implementing the Banks commitment to align its business strategy to the Paris Climate Agreements goal of limiting global temperature rise. YES BANK continues to be the only Indian banking signatory to key global climate commitments such as UNEP FIs Principle for Responsible Banking and Collective Commitment to Climate Action. The Bank has pledged to reduce Green House Gas emissions from its operations to a Net Zero by 2030. To achieve this, the Bank plans to migrate most of its facilities to renewable sources of energy.

In FY 2022-23, the share of renewable energy in the Banks electricity mix increased to 11% resulting in avoiding approximately 4,435 tCO2e emissions.

Currently, the Banks corporate office, YES BANK House, along with 34 of its 81 branches in Mumbai have switched completely to renewable energy sources. In FY 2020-21, YES BANK emerged as the first Indian Bank to measure and report financed emissions of its fund-based electricity generation portfolio. In FY 2022-23, the Sustainability Council approved the decarbonisation targets to reduce the financed emissions intensity of the Banks fund-based electricity generation portfolio, in line with the Science-Based Targets initiative (SBTi) well below 2 degree, striving for 1.5 degree scenario. The Bank continues to support climate-aligned sectors like renewable energy, through its green bonds, and aims at developing targeted products for green financing. E.g., YES Kiran, the rooftop solar loans dedicated to SMEs.

The SF function works with teams across the Bank to enhance ESG and climate-related disclosures. In FY 2022-23, the Bank achieved the highest ESG score of 68 (out of 100), amongst Indian banks, in the S&P Global Corporate Sustainability Assessment 2022. For its climate change disclosures in 2022, the Bank was rated ‘A- (Leadership Band) by CDP, making it the highest rated Indian Bank for climate disclosures.

Corporate Social Responsibility (CSR)

The Bank implements various programmes to create and enhance shared value through its unique, scalable and sustainable models to achieve its Corporate Social Responsibility (CSR). The Bank delivers internal and external positive socio-environmental impacts by following a unique approach that focusses on: Promoting principles of social responsibility and inclusive growth through awareness and support Investing in socially and environmentally responsible activities to create a positive impact

Engaging with stakeholders to further the sustainability agenda of the Bank and empower them with knowledge and Collaborating with like-minded institutions and forging partnerships to address the needs of the stakeholders

This unique, multi-pronged approach has enabled the Bank to forge meaningful associations with its stakeholders, including community groups, non-profit organisations, governments, corporate peers and civil society, while delivering an exponential impact and concentrating on the Sustainable Development Goals (SDGs).

In FY 2022-23, the Bank continued to implement its five-year CSR strategy, which aims to inspire Indias youth to lead economic and social development by training themselves for market-oriented jobs and up-skilling themselves. This strategy is implemented by YES Foundation, the Banks social development arm, which aims to catalyse employment and entrepreneurship opportunities for 100,000 young people by 2026, while retaining its focus on environment sustainability.

Employability:

The Bank aims to capitalise on the demographic advantage India has in its younger generations. In FY 2022-23, through YES Foundation, over 2,500 young people have already been trained for the service sector, with over 70% of the trainees receiving gainful employment. Skills training provided to the trainees included work readiness and soft skills, which were delivered by employee volunteers through scheduled and structured sessions.

Entrepreneurship:

To strengthen the local economies, YES Foundation partnered with several non-profit organisations to promote nano-enterprises with a distinct focus on enhancing income of farmers and empowering women in the rural areas. In FY 2022-23, over 20,000 rural households across six states enhanced their income through training and capacity building, market linkages and productivity enhancement initiatives for multiple crops, including watershed management and micro irrigation systems, wherever needed.

Environmental Sustainability:

Through YES Foundation, the Bank works on enabling SMEs to integrate sustainability into their operations and reduce the overall carbon footprint. The Foundation enabled the Bank to support research to develop and improvise climate-modelling methodology and contribute towards the formulation of an India-centric climate model. In collaboration with the Department of Science & Technology (DST), the Centre of Excellence (CoE) in Climate Modelling at IIT Delhi, which has been established with the support from YES Foundation, a knowledge report titled ‘Impact of Climate Change on Indian Economy has been authored. The paper assesses and substantiates the impact of climate change within the Indian geography, specifically the changes in temperature and precipitation patterns.

To tap into the transformative potential that drives positive social change, it is vital that diverse groups in larger communities are included and encouraged to participate in the process. This collaborative, all-round approach enables the Bank to forge lasting associations with all its stakeholders, including communities, non-profit organisations, governments, corporate peers and civil society, creating a broad network of relationships that multiplies the impact.

Central Data Analytics Group (CDAG)

The Bank continues to invest in the analytics function and maintains an ongoing focus in driving value through data-driven decisions. During the year, the Banks captive analytics group was successful in achieving the below-mentioned targets: Building a unified underwriting framework using statistical nodes across all sourcing channels to enable straight-through processing and creating a unique customer experience Exploring new areas where ML models can be deployed such as EWS, AML and transaction fraud monitoring

Partnering with credit information companies to build and deploy scorecards for delinquency/portfolio management Delivering analytics as a service wherein offers to both customers/prospects on our digital platform can be served real-time and Creating a talent pool of data scientists for scaling up analytics adoption across the Bank

Business and Digital Technology Solutions (BDTS)

The BDTS team helps accelerate business growth with the most appropriate technology and partners, while keeping the customer experience as a central point of focus. The BDTS team achieves its objectives through the below initiatives:

API/microservices-based architecture: Business scale requires speed and security, and the API/ microservices architecture provides the best business/ tech model with the right framework for monetising services and penetrating new marketplaces.

AI and Machine Learning (ML):

Technology agenda around AI & Robotic Process Automation continue to hover around speeding up processes, improving accuracy and efficiency, costs. Coupled with Artificial Intelligence (AI), Optical Character Recognition technology, and Machine Learning (ML), the Bank continue to explore more challenging applications for Robotic Process Automation (RPA) within the Bank.

Platforms: As the industry moves towards a more open banking architecture, the Bank is continuously developing more robust and enhanced platforms that contribute to the Banks customer onboarding journey and open banking outlook.

Partner ecosystem:

As the Bank grows, it needs differentiated partners to create the best ecosystem of support; hence, the organisation is deeply connected to creating value-based partnerships with various players that will support diversity and inclusivity to manage its depth of technical knowledge. This will help scale the cloud and adopt low code-no code practices, hyper-automation frameworks and new-age technology support on the doorstep.

Data and analytics:

Keeping the data-driven decision-making aspiration in mind, the Bank infuses its business strategy with data and analytics, which helps accelerate its digital plans. The Bank is making a relentless effort to focus on business value by linking all data and analytics initiatives to overall enterprise business strategy and stakeholder objectives.

During FY 2022-23, various new initiatives were completed successfully, while existing systems were upgraded to their latest versions to support the growing needs of the Bank.

Top Bank-wide projects completed during the year include:

Digital Onboarding & Service Digitalisation:

The Digital Onboarding and Service Digitalisation project ensures a 24/7 availability of self-servicing channels for customers and non-customers across the Banks different lines of businesses. This project saves time and improves customer satisfaction. It will also simplify onboarding of new customers and serve the existing customers on the go.

Modernised Super-App:

IRIS by YES BANK, the next-generation mobile banking platform built on a cloud-native stack, leverages synergies available from APIs, Microservices and workflows created for existing digital platforms.

Account Aggregator:

The Account Aggregator framework, introduced by the RBI, aims to make financial data more accessible by creating data intermediaries. This important and regulated project was delivered by the Bank within a span of three months.

SME Transformation: This covers the scope of bringing all functionalities from onboarding to prelimit setting in one single system. The project helps build new functionality in the system.

Central Bank Digital Currency:

In FY 2022-23, the RBI launched, Central Bank Digital Currency referred to as Digital Rupee, denoted as eRs. The Bank played a pivotal role in the central banks vision to enable a digitally-powered economy, and has completed the project in a short span of time. Substantial users have been added as part of this initiative.

HR Tech Transformation:

The Bank has enhanced the existing Human Capital Management (HCM) system to a renewed, competitive and modern platform. The new platform helps backfill the needs for employee engagement and mobility presenting a full-stack capability from hire to retire and employee engagement needs.

Transaction Processing Hub (TPH):

TPH is a flexible solution that empowers the Bank to formulate its payments services. TPH also follows the core banking and consolidates all payment infrastructures into a central processing hub that supports multiple bank branches, in multiple countries, using multiple currencies, and in multiple languages.

Environmental Impact Projects*:

The Bank takes utmost care on its carbon footprint and environmental impacts and has undertaken to build all our new data centres with the following concepts in mind: 1) 100% renewable energy, 2) Net Zero Emission across operations, 3) Captive RE (Wind & Solar) Projects, 4) Sustainable data centre designs with Gas cooling systems, recyclable materials, reused evacuated soil and stones, 5) Water conservation and recycling via using STP, censor-based taps, and controlled water pressure systems to avoid wastage, 6) Certificate and management ISO 50001 and LEED certified data centre projects.

* Net Zero emissions across Operations (by FY30) and Value chain (by FY40) and to set a science-based target (SBTi) aligned to the 1.5-degree pathway (Paris Agreement) and in support of the UN SDGs.

YES Securities (India) Limited (A subsidiary of YES BANK)

YES Securities (India) Limited (YSIL) is the Banks wholly-owned subsidiary which has completed ten years of its operations during the year FY 2022 23. It is a full-scale capital markets intermediary that serves retail, HNIs, corporate and institutional customers. It offers a comprehensive range of products and services encompassing broking, fund management, investment banking (including a dedicated sustainable investment banking practice), merchant banking, research and institutional equities sales and trading.

YSIL is registered with the Securities and Exchange Board of India (SEBI) as a stockbroker holding membership of the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), Multi Commodity Exchange (MCX) and the National Commodity & Derivatives Exchange (NCDEX). YSIL is also a SEBI-registered Category I Merchant Banker, Investment Adviser and Research Analyst, a Sponsor and Investment Manager of the Alternative Investment Fund, Category III (YSL Alternates), and a Mutual Fund Distributor.

Background & Performance Overview

In FY 2022-23, YSIL doubled its client base for the second time in succession, and registered over 50% revenue growth in its 10th year of operation. During the year, the market faced headwinds on account of geo-political tension, technology sector layoffs and financial sector trouble in US and Europe. This resulted in weakened market sentiments, deferment of deals/ IPOs and sharp decline in average trading volumes. In spite of the economic headwinds, YSIL continued to deliver steady growth in terms of diversified profitability and RoE.

YSILs threechosenfields below: of growth are as Concerted efforts were taken towards providing value to its customers and being relevant to the chosen fields of growth. This was possible due to both, (a) the management setting the right direction at the top, and

(b) streamlining the smallest processes at the bottom. This helped the company in gaining grounds across client acquisition, product offerings and customer satisfaction.

YSILs initiatives will not only provide stimulus to the current set of businesses but also prepare it to offer their product and services with enhanced efficiency, speed and scale.

Investment Advisory & Wealth Broking Overview:

YSILs Wealth Broking business continues to offer the best proposition to its customers. It offers a wide range of products, value plans, research services, dedicated and personalised support.

Todays active retail investors are digital native. They have a different investment ethos than their predecessors and expect cutting-edge technologies to support their endeavours. In view of this, the Company has adopted a “Digital First” approach in line with what the Bank stands for. It has enabled customers to effortlessly open a Demat and YSL trading account from their web or mobile devices without any need of physical documentation.

The Company is working on further enhancements in its digital trading platforms which shall provide customers with a best-in-class user experience driven by cutting-edge technology. During the year, the business also made several enhancements to its product strategy to meet the dynamic regulatory environment and to deliver new features and products to its customers.

Customer Focus:

In FY 2022-23, YSIL doubled, second time in succession, its client base by opening ~1.5 lakh new accounts. The Company understands its customers expectations and offer a customised set of solutions as per their needs besides other off-the-shelf offerings. YSIL also serves varied customer segments through its digital and dealer-based investing experience. A strong research and “customer-first” culture drives product development and engagements, as the company helps its customers ofin their wealth creation journey. Its diversified products cater to all types of investors market novices, seasoned traders,HNI,familyoffices .corporates and

Revenue Growth:

Income for the Wealth Broking business grew from Rs 134 crore in the previous year to Rs 193 crore in the current financial year, implying a growth of 44%.

Capability Building for Future:

The Companys strategy for the upcoming years is focussed on leveraging digital transformation to increase its efficiency, (ii) Activation, and (iii) ARPU. YSIL is set to launch its new web and mobile platforms in the current financial year. Ably supported by an experienced leadership team, robust processes and risk management, the Wealth Broking business is poised to maintain its growth trajectory and achieve new milestones.

Institutional Broking Overview:

The Companys Institutional Broking division continues to gain recognition. The team offers incisive research and proficientsales trading capabilities to leading institutional investors, such as Asset Management Companies, Insurance Companies, Portfolio Management Services, Alternate Investment Funds, Banks and Corporate Treasuries. The business is also growing its presence with foreign portfolio investors. The Companys research, corporate access and deep-rooted relationships with institutional investors will help it further expand its institutional equity business.

YSILs 28-member strong research team brings a combined ~260 years of equity research experience with analysts actively covering 200+ companies, among the largest coverages in the industry. The team is highly motivated and well-recognised for its ability to spot high conviction midcap ideas, contra-to-market ideas and its deep corporate relationships. The Companys institutional business is well recognised for hosting numerous events and roadshows, on-ground work and channel checks and governance checks on listed stocks.

Research is backed by a robust sales and execution setup to ensure that client servicing standards remain consistent and that clients execution experience is prompt and precise.

Financial Performance:

The revenue from its institutional equity business increased by 80% from Rs 8.4 crore in FY 2021-22 to Rs 15.2 crore in FY 2022-23, driven by an increased flow of business, steady market share and traction in marquee deals.

Growth Philosophy:

The Company continues to make astute investments towards augmenting its human capital knowledge, leadership position and technical capabilities.

Investment Banking Overview:

The Investment Banking team provides advisory-based financial and strategic transaction services to large and mid-cap corporates and financial sponsor clients, with key focus on merger and acquisition advisory and private equity/special situation financing advisory. The Company provides investment banking services to its customers and earns revenue in the form of advisory fees on issue management services, mergers and acquisitions, debt syndication, and sale of business.

YSILs highly experienced teams offer expertise across a variety of sectors including Food and Agribusiness, Industrials, Healthcare, Renewables, Business Services, Infrastructure, Chemicals, and Pharmaceuticals, Technology, Banking, Financial Services and Insurance (BFSI), Future Mobility, Real Estate and Hospitality.

Based on Niti Aayogs report, an investment of Rs 19.7 lakh crore is expected in Electric Vehicles (EV) in India in the next 10 years. Of this, nearly Rs 75,000 crore will be invested in the next 2-3 years by the 75 shortlisted PLI applicants. This investment will be made across the entire EV value chain covering the Auto Component ecosystem, Mobility, Energy Storage and Green Hydrogen.

YSIL is reviewing the Investment Banking business to integrate with YES BANK for achieving better synergies and improvising the overall profitability.

Merchant Banking

Overview:

YSILs Merchant Banking practice has a strong focus on capital market activities offering a comprehensive bouquet of products including initial public offerings, qualified institutions placements, rights issues, open offer, buyback, delisting and other advisory . services

Strategy:

The Company is strategically focussing on growing its business by targeting to become a lifecycle banker to clients of YES BANK. The team engaged with leading Indian companies as a trusted advisor to successfully close three capital market transactions aggregating

~ Rs 3,400 crore. This includes the below mandates: BRLM to IPO of Emudhra BRLM to IPO of Radiant Cash Management Services Sellers Broker to OFS of Hindustan Aeronautics Growth Philosophy:

The Investment Banking and Merchant Banking businesses of YSIL continue to build upon the Companys market position amongst the leading Merchant Bankers and a leader in advisory services across sectors such as Logistics, Industrials, Infrastructure, Healthcare, and Chemicals Renewables. Going forward, the business aims to further broad-base its advisory and deal-making capabilities across coverage sectors.

Overview of Financial Performance

Key Ratios:

Particulars

FY 2022-23 FY 2021-22
Return on average equity (‘ROE) (%) 2.0%* 3.2%
Return on average assets (%) 0.2% 0.4%
EPS - Basic (FV Rs 2) 0.27 0.43
EPS - Diluted (FV Rs 2) 0.27 0.43
Net interest margin (%) 2.6% 2.3%
Book value per share (FV Rs 2) 14.17 13.47
Cost to income 73.1% 70.1%
Yield on advances 8.9% 8.1%
Cost of funds 5.5% 5.3%
Capital Adequacy Ratio Basel III
CET 1 13.3% 11.6%
Tier - I 13.3% 11.6%
Tier - II 4.7% 5.8%
Gross non performing advances (NPA) % to Total Advances 2.2% 13.9%
Net NPA % to Total Advances 0.8% 4.5%
CASA ratio to % of total deposits 30.8% 31.1%

*For the purpose of determining ROE, the Bank has considered weighted average shareholder funds during the year. Basis simple average of shareholder funds the ROE is 1.9%.

The Bank has CASA ratio of 30.8%. The Banks shareholder returns for FY 2022-23 in terms of basic and diluted EPS were Rs 0.27 and Rs 0.27 respectively. The book value per share was Rs 14.17.

Highlights for FY 2022-23:

Net Profit for the year isRs 7,174.09 million

This has been the second straight year of full year profitability post moratorium on the Bank Balance Sheet grew 11.5% Y-O-Y

CET-I ratio is at 13.3% and CRAR is at 17.9%. NNPA ratio significantly improved at 0.8% pursuant to sale of stressed assets to asset reconstruction company (ARC)

Operating Performance: Rs ( in million)

Particulars

FY 2022-23 FY 2021-22 % change
Interest income 226,974.30 190,235.11 19.3%
Interest expense 147,798.59 125,256.58 18.0%

Net Interest Income

79,175.72 64,978.54 21.8%
Non interest income 39,266.50 32,624.69 20.4%

Operating Revenue

118,442.22 97,603.23 21.4%
Operating expenses 86,614.58 68,443.94 26.5%

Operating Profit

31,827.64 29,159.29 9.2%
Provisions and contingencies 22,198.46 14,800.81 50.0%

Profit Before Tax

9,629.18 14,358.48 -32.9%
Provision for tax 2,455.10 3,696.36 -33.6%

Net Profit/(Loss)

7,174.09 10,662.12 -32.7%

Net Profit for FY 2022-23 is Rs 7,174.09 million as compared to profit Rs 10,662.12 million for FY 2021-22 lower by 32.7% largely on account of higher provision to step-up Provision Coverage Ratio (PCR) on NPA as well as security receipts.

The Banks operating profit increased by 9.2% Y-O-Y on the back of NII and higher Non-Interest Income. The Bank has provided Rs 23,917.92 million towards non-performing investments and non-performing advances during the year which includes provision on certain non-performing assets that contributed to step-up in PCR to 62.3% from 49.4% last quarter.

Net Interest income (NII) of the Bank increased by 21.8% to Rs 79,175.72 million during FY 2022-23 as compared to Rs 64,978.54 million during FY 2021-22. The Net Interest Margin (NIM) was 2.6% in FY 2022-23.

Non-interest income consists of fee, trade income and gain on sale of securities. Non-interest income increased by 20.4% from Rs 32,624.69 million in FY 2021-22 to Rs 39,266.50 million in FY 2022-23. Higher non-interest income and NII was largely offset by higher operating expenditure.

Operating expenses increased by 26.5% from Rs 68,443.94 million in FY 2021-22 to Rs 86,614.58 million in FY 2022-23. The employee cost increased from Rs 28,556.91 million in FY 2021-22 to Rs 33,627.00 million in FY 2022-23. Other operating cost increased by 32.8% from Rs 39,887.03 million in FY 2021-22 to Rs 52,988 million in FY 2022-23.

Provisions and contingencies (excluding provision for taxes) increased by 50.0% from Rs 14,800.81 million in FY 2021-22 to Rs 22,198.46 million in FY 2022-23.

Net interest income:

The following table sets forth, for the periods indicated, the net interest income and margin:

Rs ( in million)

Particulars

FY 2022-23 FY 2021-22 % change
Interest income 226,974.30 190,235.11 19.3%
Interest expense 147,798.59 125,256.58 18.0%
Net interest income 79,175.72 64,978.54 21.8%
Net interest margin 2.6% 2.3%

Net Interest Income (NII) of the Bank increased by Rs 14,197.18 million to Rs 79,175.72 million during FY 2022-23 as compared to Rs 64,978.54 million during FY 2021-22.

Non-Interest income:

Rs ( in million)

Particulars

FY 2022-23 FY 2021-22 % change
Commission, exchange and brokerage 20,913.06 16,380.44 27.7%
Profit on sale of investments (net) 344.21 2,594.60 -86.7%
Profit/(Loss) on the revaluation of investments (net) (34.83) 307.30 -111.3%
assets Profit/(Loss) on sale ofland, building and other 69.55 125.88 155.2%
Profit on exchange transactions (net) 7,446.19 6,008.16 23.9%

Income earned by way of dividends etc. from subsidiaries, companies and/or joint ventures abroad/in India

- - 0.0%
Miscellaneous income 10,528.33 7,460.08 41.1%

Total

39,266.50 32,624.69 20.4%

Non-interest income consists of commission and fee income, trade income, derivative and foreign exchange income, gain/loss on sale of securities and other income. Non-interest income of the Bank increased by 20.4% to Rs 39,266.50 million during FY 2022-23 as compared to Rs 32,624.69 million during FY 2021-22 on the back of strong fee growth through cross-sell and transaction banking.

Operating expenses:

The following table sets forth, for the periods indicated, the principal components of Operating expenses: ( Rs in million)

Particulars

FY 2022-23 FY 2021-22 % change
Payments to and provisions for employees (A) 33,627.00 28,556.91 17.8%
Other operating expense (B) 52,987.57 39,887.03 32.8%

- Depreciation on own property (including non-banking assets)

4,290.58 3,983.62 7.7%
- Other administrative expenses 48,696.99 35,903.41 35.6%

Operating expenses (A)+(B)

86,614.58 68,443.94 26.5%

Cost to income ratio

73.1% 70.1% 4.3%

Non-interest expenses primarily include employee expenses, depreciation on assets and other administrative expenses. Operating expenses increased by 26.5% from Rs 68,444 million in FY 2021-22 to Rs 86,615 million in FY 2022-23.

Employee costs increased by 17.8% from Rs 28,557 million in FY 2021-22 to Rs 33,627 million in FY 2022-23. The number of employees have increased from 24,346 at March 31, 2022 to 27,517 at March 31, 2023. Employee costs accounted for 38.8% of operating expenses of the Bank for FY 2022-23 compared to 41.7% for FY 2021-22.

Other administrative expenses increased by 35.6% to Rs 48,697 million in FY 2022-23 driven by business volumes, higher IT spends due to escalated annual maintenance charges and support resources. Number of branches also increased to 1,192 as at March 31, 2023 from 1,122 as at March 31, 2022.

Provisions and contingencies (including provision for tax):

Provisions and contingencies increased by 33.3% from Rs 18,497.17 million to Rs 24,653.55 million primarily led by accelerated provision to step-up PCR.

The key components of provisions are provisions for NPAs of Rs (169.46) million [FY 2021-22: Rs 7,185.19 million], provision for taxation of Rs 2,455.10 million [FY 2021-22: Rs 3,696.36 million], and provision for standard assets Rs (1,496.20) million [FY 2021-22: Rs (251.53) million] and provision on investments of Rs 24,087.38 million [FY 2021-22: Rs 7,903.78 million].

During the year for stressed loans transferred to ARC where the consideration received was higher than that net book value at the time of transfer and the cash recovery is lower than the net book value, such excess amounts were not reversed in the Profit and Loss Account in accordance with RBI guidelines. Further, as of reporting date, the security receipts have being assessed for the provisioning as per the extant RBI guidelines and taking into account the principle that there should be no provisioning arbitrage between the provisioning on security receipts vis-a-vis the provisioning requirements on the underlying exposure, had it stayed in the books.

Financial Condition:

Assets:

( Rs in million)

Particulars

FY 2022-23 FY 2021-22 % change
Assets

Cash and balances with Reserve Bank of India

128,640.85 434,522.67 -70.4%

Balances with banks and money at call and short notice

64,103.52 31,873.23 101.1%

Investments

768,882.97 518,955.56 48.2%
SLR investments* 651,582.02 437,084.56 49.1%
Non SLR investments 117,300.96 81,871.00 43.3%

Advances$

2,032,694.44 1,810,519.91 12.3%
In India 1,733,086.38 1,733,086.38 0.0%
Outside India 77,433.53 77,433.53 0.0%

Fixed assets

24,447.72 21,331.27 14.6%

Other assets

529,091.80 364,999.62 45.0%

Total

3,547,861.31 3,182,202.25 11.5%

*Includes investment in government securities, banks in India are required to maintain a specified 18.00% as at March 31, 2023, of their net demand and time liabilities by way of liquid assets like cash, gold or approved unencumbered securities. $Includes Rs 30,689.28 million of interbank reverse repo classified as advances as per RBI Master Circular No. DOR.ACC NO.37/21.04.018/2022-23.

Total assets of the Bank increased by 11.5% from Rs 3,182,202.25 million as at March 31, 2022 to Rs 3,547,861.31 million as at March 31, 2023, primarily due to increase in advances and investments.

Cash and cash equivalents

Cash and cash equivalents include cash in hand and balances with RBI and other banks, including money at call and short notice. Cash and balances with Reserve Bank of India decreased from Rs 434,522.67 million at March 31, 2022 to Rs 128,640.85 million at March 31, 2023.

Investments

Total investments increased by 48.2% from Rs 518,955.56 million at March 31, 2022 to Rs 768,882.97 million at March 31, 2023.

SLR investments increased by 49.1% from Rs 437,084.56 million in FY 2021-22 to Rs 651,582.02 million in FY 2022-23. Non SLR investments increased by 43.3% from Rs 81,871.00 million in FY 2021-22 to Rs 117,300.96 million in FY 2022-23.

Advances

During FY 2022-23, the Bank recorded addition of 12.3% in its loan book with advances increasing to Rs 2,032,694.44 million. Normalised for sale to asset reconstruction company and reverse repo, the advances growth was at 13.2% Y-O-Y.

Corporate banking advances reduced to 25.4% Y-O-Y. Retail advances increased 38.6% Y-O-Y.

Net advances of IFSC Banking Unit (IBU) in GIFT City decreased from Rs 77,434.53 million at March 31, 2022 to Rs 65,686.93 million at March 31, 2023.

Fixed assets and other assets

Net fixed assets is Rs 24,472.72 million as at March 31, 2023. Increase during the Q4FY23 in net block of fixed assets was Rs 1,870.94 million mainly driven by addition of Rs 1,394.69 million in capital work-in-progress, computer software (Rs 279.11 million).

Financial Condition:

Liabilities

Rs ( in million)

Particulars

As at March 31, 2023 As at March 31, 2022 % change

Liabilities

Capital

57,509.55 50,109.91 14.8%

Share Warrants Subscription Money

9,483.92 - NA

Reserves and Surplus

340,431.13 287,308.87 18.5%

Deposits

2,175,018.62 1,971,917.33 10.3%
Current deposit accounts 336,028.81 263,891.16 27.3%
Savings account 332,999.17 349,704.73 -4.8%

CASA

669,027.98 613,595.88 9.0%
Term Deposit 1,505,990.64 1,358,321.45 10.9%

Borrowings

774,519.92 722,045.84 7.3%
Borrowings in India 671,549.94 614,830.87 9.2%
Borrowings outside India 102,969.98 107,214.97 -4.0%

Other Liabilities and Provisions

190,898.17 150,820.31 26.6%

Total

3,547,861.31 3,182,202.25 11.5%

Equity Capital and Reserves and Surplus

On December 13, 2022, the Bank issued 3,696,155,702 equity shares of face value Rs 2 each fully paid up for cash on a preferential basis. During FY 2022-23, the Bank has also issued 3,666,651 equity shares of face value of Rs 2 each pursuant to the exercise of stock options by employees under the approved stock option schemes.

Movement in Share Capital and Share Warrant

Rs ( in million)

Particulars

As at March 31, 2023 As at March 31, 2022
Opening Share Capital 50,109.91 50,109.81
Addition due to exercise of share option 7.33 0.09
Addition due to shares issued on preferential basis 7,392.31 -
Addition due to shares warrants issued 9,483.92 -

Closing Share Capital and Share Warrant

66,993.47 50,109.91

Deposits

Deposits increased by 10.3% from Rs 1,971,917.33 million as at March 31, 2022 to Rs 2,175,018.62 million as at March 31, 2023. Term deposits increased by 10.9% from Rs 1,358,321.45 million as at March 31, 2022 to Rs 1,505,990.64 million as at March 31, 2023, savings account deposits decreased by 4.8% from Rs 349,704.73 million as at March 31, 2022 to Rs 332,999.17 million as at March 31, 2023 and current account deposits increased by 27.3% from Rs 263,891.16 million as at March 31, 2022 to Rs 336,028.81 million as at March 31, 2023. The current and savings account deposits increased from Rs 613,595.88 million as at March 31, 2022 to Rs 669,027.98 million as at March 31, 2023. Total deposits as at March 31, 2022 constituted 73.74% of the funding (i.e., deposits and borrowings). The Banks CD ratio stood at 92.0% as at March 31, 2023.

Borrowings

Borrowings increased by 7.3% from Rs 722,045.84 million as at March 31, 2022 to Rs 774,519.92 million as at March 31, 2023.

Other liabilities

Other liabilities increased by 26.6% from Rs 150,820.31 million as at March 31, 2022 to Rs 190,898.17 million as at March 31, 2023.

Regulatory capital

In line with the RBI circular on Basel III Capital Regulations, currently for computing capital requirement, YES BANK has adopted the standardised approach for credit risk, standardised duration approach for market risk and basic indicator approach for operational risk. The Bank has also put in place a Board-approved policy on Internal Capital Adequacy Assessment Process (ICAAP) which defines and sets processes to review and improve the techniques used for identification, measurement and assessment of all material risks and resultant capital requirements.

Capital Adequacy Ratios

As at March 31, 2023 As at March 31, 2022

Total capital ratio (CAR) out of the above

17.9% 17.4%
- CET1 13.3% 11.6%
- Tier I Capital 13.3% 11.6%

Subsidiary Performance

During FY 2022-23,YSILreportedanetprofitof Rs 184.10 million. Total revenue from operations of YSIL increased by 38.15% from Rs 1,574.90 million in FY 2021-22 to Rs 2,186.60 million in FY 2022-23.

As at March 31, 2023, the total capital infused and outstanding is Rs 1,490.0 million in YSIL.

Update on Ind AS implementation

The Indian Accounting Standards (‘Ind AS), as notified under section 133 of the Companies Act 2013 read with Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time, have been formulated keeping the Indian economic and legal environment in view and with a view to converge with IFRS Standards. The RBI through its Notification No. RBI/2018-2019/146 DBR.BP.BC. No.29/21.07.001/ 2018-19 dated March 22, 2019 on “Deferral of Implementation of Indian Accounting Standards (Ind AS)” notified to all the scheduled commercial banks that legislative amendments recommended by the RBI are under consideration of the Government of India. Accordingly, RBI has decided to defer the implementation of Ind AS till further notice.

As per RBI directions, the Bank has taken following steps so far:

The Bank is submitting half yearly Proforma Ind AS financial statements to the RBI

Formed Steering Committee for Ind AS implementation (‘the Ind AS Steering Committee). The Ind AS Steering Committee comprises Group Chief Financial Officer (CFO) (Chairman), Chief Risk Officer Officer (COO), Officer(CIO) and members of the Senior Management from Financial Chief Information Management, Risk Control and Treasury Operations. The Ind AS Steering Committee oversees the progress of Ind AS implementation in the Bank and provides guidance on critical aspects of the implementation such as Ind AS technical requirements, systems and processes, business impact, people and project management. The Ind AS Steering Committee closely reviews progress of the implementation The Ind AS Steering Committee gives updates to the Audit Committee of the Board and to the Board on preparedness for migration to Ind AS on a periodic basis The Bank will continue to liaise with RBI and industry bodies on various aspects pertaining to Ind AS implementation