COMPETITVE STRATEGY OF A

LATE ENTRANT
“one of the strengths and differentiating features of Yes Bank is its knowledge banking approach. Our approach is service oriented; we offer what
is missing in the marketplace. We offer choice and convenience to customers”

- Rana kapoor, founder, MD and CEO, Yes bank

INTRODUCTION
MISSION, VISION, GROWTH, REFORMS,
ABOUT YES BANK AND
DIFFERENTIATING STRATEGIES
 Yes Bank
• Yes Bank started its operation in late 2004.
• Vision: To create a commercially viable
financial institution that incorporates
sustainable development within core business
functions
• YES BANK is founded by Mr. Rana Kapoor and
Late Mr. Ashok Kapur, who have a collective
financial stake of 27.16%.
 Yes Bank
• YES BANK has fructified into a "full service" commercial Bank that has
steadily built
– Corporate and Institutional Banking,
– Financial Markets,
– Investment Banking,
– Corporate Finance,
– Branch Banking,
– Business and Transaction Banking, and
– Wealth Management
business lines across the country
• Bank's customers are being served through an extensive branch
network, comprising of more than 125 branches over 100 locations
across India as well as 93 off-site ATMs in Mumbai, Pune and the NCR
region.
Differentiating strategies

Knowledge Technology Human Capital

Banking Edge

Top management team very

The bank filled in the experienced.
gaps left by other banks Higher pay to retain talent
Key initiatives by bank to recruit and
train manpower
Promotion Yes entrepreneur in action.
•Thecustomer
The companysegment
use latest
targeted
technology
by yes Yes professional entrepreneurship
available.
bank
•Strategic
mainly comprises
partnership
of corporate
with reputed
borrowers
technology
or
who gave them more business per Yes
•provider
NHI, mentor.
head
•Outsourcing
compared to its
ofcompetitors
non core business Yes school of banking.
Yes university and school
relations.
 Continued…..
• Yes bank has achieved unprecedented growth since its
inception in 2004

• Maiden IPO in 2005, oversubscription of shares by 30

times

• Challenge for yes bank to survive in an overcrowded

market

• Delay in entry was turned into an opportunity

 Differentiating strategies
 DIFFERENCE
YES BANK OTHER PRIVATE BANKS
Concentrated on corporate Retail banking
banking
Exploited small business Large business sectors
sectors
Its entry in the market was During their establishment
affected by the they were given relatively
New policies and decisions easy approval
taken by RBI
 Reforms in the banking sector
• Better disclosure norms for the banks, deregulation of
interest rates, more functional autonomy to public sector
bank’s board

• Setting up of new private sector banks

• Reverse mergers of private banks

• Technological advancements
 Yes bank
• Incorporated in November 2003

• Name ‘yes bank’ arrived as result of marketing research

• The promoters of the bank were Rana kapoor and Ashok

kapur, financial assistance provided by Rabobank

• Indian promoters had a 39 % stake in the bank, Rabobank

had a 20 % stake and foreign investors had 18 %

• Also co-promoted by CVC Citigroup, AIF Capital and

ChrysCapital
• It is only bank to obtain Greenfield license issued by RBI
since 1990s
 Differentiating strategies
Knowledge banking

Technology

Human resources

Promotion
DIFFERENTIATING STRATEGIES

KNOWLEDGE BANKING,TECHNOLOGY,
HUMAN RESOURCE AND PROMOTION
 KNOWLEDGE BANKING
• Identification of specific growth sectors

• Customize Solutions for industry verticals

• A specialized Development & Knowledge Banking (DKB) division has

been institutionalized within the Bank to spearhead the knowledge
focus.

• A specialized Food & Agribusiness Strategic Advisory and Research

(FASAR) practice has been domiciled within DKB.

• Partnered with PHDCCI, Principal Knowledge Partner in association

with the State Governments to provide new impetus to the growth
initiatives in the states as also to apply a focused developmental
strategy in accordance with the potential the respective states offer
 KNOWLEDGE BANKING
• Dedicated teams of bankers and industry experts provide
specialized solutions for each of the sunrise sectors

• Provide customize solutions

• Strong customer relationships and Cross-sell products

Superior fee income is responsible for the superior return on assets

that the bank is able to generate compared to its peers. Yes Bank’s fee
income—about 47% of its net income—is among the highest in the
industry.
SECTORAL DISTRIBUTION: LOANS

These sectors account for 74% of Yes Bank’s advances.

 GROWTH SECTORS

Media &
Food & Agribusiness Telecommunications
Entertainment

Information Infrastructure Retail and Consumer

Technology Development Market

Strategic Initiatives
Life Sciences &
& Advisory-
Biotechnology
Government
 Unique “Knowledge–banking” approach to doing business in the
F&A sector…
Numerous sub-sectors across the Agri-value-chain…

Agri & Food Prodn. and Logistics & Trading Processing Food Retail
Inputs Warehousin Distrbn. & Food
g Service

Seeds Food Ports Edible Oil Primary Process Super Markets

Fertilizers Corporation of Reefer Grain Grain Milling Hyper Markets
Agro- India Transport Spices Edible Oil Fast Food &
chemicals State Caterers Fruits & Veg Dairy Beverage Chains
Agri-biotech Warehousing Meat/ aqua Fruits & Veg
Irrigation Corporation Commodity Sugar
Farm Central Exchanges High Value
Machinery Warehousing Processing
Poultry Feed & Corporation Confectionery
Equipment Pvt. Bakery
Dairy Feed & Warehouses Beverages
Equip Cold Storages Dairy
Aqua & Fishery Floriculture Meat & Poultry
Feed & Greenhouses Marine &
Equipment Fishery
Food A dedicated Food and Agribusiness Strategic Advisory and Research
Packaging team consisting of sector experts has been domiciled within the
Food
Strategic Initiatives & Advisory Government

(SIG) Group, is the government advisory & development research

arm within YES BANK. It has been working in partnership with
Central government ministries,  State Governments , Bilateral &
Multilateral Agencies, Key Educational Institutions and Corporate
Partners to identify development potential within sunrise sectors,
conceptualize sustainable knowledge based projects and then
develop these on a Public Private Partnership (PPP) mode

• Division unique to the banking industry

• Works closely with the Government, in view of the Government’s
irreplaceable role, as a crucial enabler for mass development.
• Design of Knowledge Reports
 TECHNOLOGY
• TECHNOLOGY as a strategic tool

• Calibrated decision to invest in IT system and

processes

• Multiple technology enabled channels

• Corporate internet banking, ATM, Mobile banking,

and Phone banking

• Partnership with many reputed technology service

provider
• Partnership with Gartner Inc and PWC

• Another strategic partnership with i-flex solution

ltd, used FLEXCUBE(universal banking solution)

• Believed in outsourcing activities

• Bank entered into a total outsourcing deal with

Wipro InfoTech (7year contract)

• Focus core business of providing financial services

to customers
 Critical areas identified on the Technology front

Achieving a high level of efficiency through the

automation of operation

Maintaining centralized databases and centralized

processing for speedy retrieval of data

Connectivity with customers and external agencies to

provide a consistent experience at various “touch
point”

Using the best system for seamless integration of front,

middle, and back offices
Adopting the best surveillance and security system to
provide a better comfort zone for user of the bank’s
system

Using real time environment for good disaster recovery

process and back up system
 HR INITIATIVES
• YES Entrepreneur in Action

• YES Professional Entrepreneurship Program (YPEP)

• YES Retail Entrepreneurship Program (YREP)

• YES Mentor

• YES School of Banking (YSB)

• YES University and School Relations

 PROMOTION
• Non- traditional promotion tactics

• Plant as a Brand ambassador

THE GROWTH STORY

HISTORY,FOCUS,MAJOR INSTRUMENTS, KEY TO

SUCCESS,ACHIEVEMENTS AND ANALYST’S VIEW.
 The Growth History

• Grown at Tremendous pace since its inception

• One of the most successful ventures in India: Balance

sheet standing at 1300million in the first two quarters

• Started its operation with 250 employees & 2 branches

 Focus of Yes Bank
Lending to corporate clients

Wealth management

Business banking (Corporate & Institutional Banking

contributed 70% of its total business)

SMEs
 Yes Bank’s Business Segments
Corporate & Institution ●
Companies with turnover over Rs. 7.5
Banking billion

●
Companies with turnover between Rs.
Business Banking
0.5 billion and Rs. 7.5 billion

●
Individuals with annual income
Retail Banking
between Rs. 0.5 million
Major Instruments for Growth
 Focused business strategy

 Entrepreneurial leadership

 Highly rated employees

 Best-in-class processes

 Evolutionary technology
 The Growth Story
Key Balance Sheet Items 2006(Rs mn) 2005(Rs mn) Growth(%)
Advances 480 191.1 151
Investments 221.9 116.1 91
Shareholder's funds 75.6 55.2 37
Deposits 546.1 177.8 207
Borrowings 119.4 36.3 229
Business footprint 816.1 379.8 115

900

800

700

600

500
2006(Rs mn)
2005(Rs mn)
400
Growth(%)
300

200

100

0
Advances Investments Shareholder's funds Deposits Borrowings Business footprint
 Recent Trend in Growth

Key Balance Sheet Items 2010(in Rs Cr) 2009(in Rs Cr) Growth(%)

Advances 22193.12 12403.09 78.9

Investments 10209.94 7117.02 43.45

Total share capital 339.67 296.98 14.37

Deposits 26798.57 16169.42 65.73

Borrowings 4749.08 2189.1 116.9

Total assets 36382.5 22900.8 58.86

 Reasons for Successful Market Entry

Bank’s competence in terms of using high-end technology

Knowledge banking approach

Emphasis on highly qualified human resources

Catered to niche segment

Catered to niche segment of the market with a

differentiated strategy

Yes Bank started its operations during Retail boom

 Achievements
 In December 2006, the third best bank in India in Business world’s
annual survey

 The second best among the new private sector banks in the
Financial Express-Ernst & Young Survey of India

 Top ten banks in India on the basis of following parameters

 Profitability
 Efficiency
 Safety
 Size
 Valuation
 Growth
 Business World Rankings
Rank Bank
1 HDFC Bank
2 ICICI Bank
3 Yes Bank
4 Indian Overseas Bank
5 Kodak Mahindra Bank
6 Punjab National Bank
7 Andhra Bank
8 Corporation Bank
9 Allahabad Bank
10 UTI Bank(now AXIS Bank)
Yes Bank’s Rank on Various Parameters
Measure Rank
Profitability 6
Efficiency 1
Safety 1
Size 32
Valuation 3
Growth 1
 Earnst & Young Rankings in 2006
Name Final Strength Growth Profitability Efficiency Credit
Rank & Quality
Soundness
ICICIC Bank 1 1 3 5 1 2
Yes Bank 2 4 1 3 3 1
HDFC Bank 3 3 6 1 4 5
UTI Bank(Axis 4 5 5 2 2 6
Bank)
Kotak 5 6 4 4 5 3
Mahindra
Bank
 Earlier in Mid 1990s Private Banks
Suffered…

High Interest Regime

Liquidity Problem as borrowers paid more than 25% interest

on loans

Call money market had crossed the 100% mark

Default rates were high

 Analysts view on YES Bank
• Timed Market Entry & Impressing Business Model

• Some analysts felt that bank growing too fast

• Bad loans may also increase but that was not a cause for
concern as long as the company increased its share of CASA
& expanded branches

• Growth Trend may continue further for 15-20 years.

FUTURE STRATEGY AND
CONCLUSION

FUTURE STRATEGY,MOBILE
BANKING,CONCLUSION.
 STRATEGY FOR THE FUTURE
• Strategy Following The Global Financial Turmoil : focus is back on branch
banking, focusing on SMEs and individuals ,the bread and butter business.
The expansion of branches-250 by JUNE 2011,750 by march 2015
 YES First Business and YES Prosperity-Business programs
 The relationship-driven service-centric approach to deliver customized
and comprehensive financial solutions to suit the specific requirements of
SMEs

• CASA= Cost Of Funds At 9%:

 Not just cost of funds , the interest margins, at 2.9 per cent and is
improving.
 Besides, four-and-a-half years old and has a Casa base of Rs 1,200 crore
(Rs 12 billion). 
 Going from 9 per cent to 20 per cent not with such infrastructure,
relationships and focus to meet the target.
 Target to increase the share of Casa to 14-15 per cent by the end of the
year and to 25 per cent of the deposit base by 2012
 STRATEGY FOR THE FUTURE
• Focus More On Working Capital Finance With A High Degree Of Cross Selling of
Wealth Management Insurance products & services, to significantly strengthen client
relationships
• The bank has strategically collaborated with First Data Corporation, USA, to establish a
widespread network of Automated Teller Machines (ATMs) across various cities in India. -
1200 ATMs by March 2012 and 3000 ATMs by March 2015.
• Futuristic Branch: A chip embedded in the debit cards of top customers alerts staff when
one walks in. An executive meets him and greets him by name

• Retail Space:
 more engagement in the branches.
High street bank and well-positioned to cater to small businesses by getting the promoters
and the staff salary accounts and fulfilling the needs for small cash requirements from the
company.

• NPA: Once the loans are restructured they will move out of the NPA category. Negligible
exposure to sectors such as textiles which have seen higher stress. Among the best net NPA
ratios of 0.33 per cent and gross NPAs of 0.68 per cent.

• DERIVATIVES: good opportunity for FE flows, for trade flows, options and good interest rate
and cross currency contracts.
 MOBILE BANKING

• Nokia, YES BANK, India’s new-age private sector Bank and

Obopay India -Mobile Payment Service ,a platform enabling
transfer of money using the mobile device in a secure manner.

• Mobile Money Services will augment financial inclusion

amongst the unbanked and under-banked consumer
segments by bringing financial services to the consumers’
mobile device and will create a financial ecosystem which is
inclusive, sustainable and scalable.

• This initiative will provide consumers with greater ‘Anytime

Anywhere’ convenience and will be a significant milestone on
the path of financial inclusion as stated by the Reserve Bank
of India.
 CONCLUSION

a) credit - 35-40% p.a. over the medium term;
b) distribution - branch network ;incremental
branches largely in North and West India;
c) liabilities - including strong growth in CASA
(current account savings account) ratios.
d)While focus will shift to retail assets - mainly
mortgages and credit cards - the share of retail is
likely to remain well below 15% even with a
medium-term outlook.
e)SME and mid-corporate segments are likely to be
the key growth drivers- also likely to have higher
loan yields.

YES BANK

f)The management appears confident of maintaining g)The corporate institutional

current net interest margins due to: banking :350 new relationships
a) Growth in low CASA share; b) Increasing proportion of with large companies.
higher yielding SME and mid-corporate loan book; and c) The commercial banking group is
well-matched asset and liability durations.
targeting 2,500 relationships with
Non-interest income growth has been a key strength of mid-sized companies by 2012
Yes Bank so far and the management expects it to remain
strong going forward as well .
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