State Bank of India's digital startup, YONO, could be a $40 billion goldmine

MUMBAI: The country’s largest lender State Bank of India (SBI) could be sitting on a goldmine when it comes to its digital startup YONO (You only need one). The super-app could be valued at $40 billion with the lender considering long term plans to hive it off as a separate entity once it assumes a certain size.

“The companies which are making losses are valued at $10 billion - $20 billion, YONO which is such a versatile platform has been making good amount of profits, using that benchmark YONO should be valued at $40 billion, but we haven’t commissioned any independent agency to value the platform,” Rajnish Kumar, chairman, SBI told ET.

SBI had launched the YONO platform in 2017 and within three years of inception, notional profit and loss statements created by the bank suggests that its profits could be running in a few hundred crores. Bank is booking profits basis earnings of fee income, savings on net interest income, productivity gains and reduction in costs due to its digital only nature.

“Hiving YONO off as a subsidiary is a very good possibility but a couple of things have to be done, we should have APIs that could be given to other banks but first looking at the opportunities with our customer base we want to perfect that and then look outside,” said Kumar.

The bank which has a customer base of 49 crore processes atleast 4 lakh transactions on its digital offerings on a daily basis. 55% of the bank’s transactions are currently being conducted through the digital channel and half of it is contributed by YONO.

“No doubt SBIs YONO platform is quite world class but it will not be value accretive as long as it is under the SBI roof, look at SBI cards it is one of the best valued NBFCs today,” said Siddharth Purohit, analyst, SMC Institutional Equities. “So, if tomorrow SBI decides to hive YONO off as a subsidiary the market will determine its value basis that.”

ET had recently reported that Yes Bank had valued its digital channel at nearly $7 billion. Payment providers who don’t have physical presence have been lapped up by investors. According to the New York-based data analytics platform, CB Insights, Paytm is the second most valued fintech in the world with a valuation of $16 billion. A Morgan Stanley report released in 2019 had valued payments provider PhonePe at $7 billion while online insurance platform Policy Bazaar could be valued at $3.5 billion in an upcoming IPO.

“The platform created by any bank such as SBI is very different from a pure play payment venture or an insurance aggregator, cause for a Bank this is just an enabler to a larger business,” said Ashvin Parekh, founder, Ashvin Parekh Advisory Services. “End of the day you can put any number to it but the value of the payment platform will be determined by an investor depending on the potential he sees in the product.”

The bank has 2.76 crore users on YONO and has sourced completely digital Rs 20,000 crore personal loans and Rs 24,000 crore agriculture gold loans on the platform. 50% leads for home loans and MSME loans are being generated through it. YONO is adding more than 70,000 customers daily, and is giving loans of over Rs 70 crore per day.