Yes Bank has reported impressive results for the fiscal second quarter (Q2-FY25), showcasing significant improvements in profitability and asset quality. The bank's performance highlights its recovery trajectory and strategic focus on growth across various segments.

Profit for Q2-FY25 reached ₹566.59 crore, marking a remarkable 147.8% increase from ₹228.64 crore in the same quarter of the previous fiscal year. This substantial growth reflects the bank's effective cost management and operational efficiency, allowing it to outperform analyst estimates.

The bank's total income during the quarter was ₹9,225.45 crore, representing a 15.6% increase from ₹7,980.61 crore in Q2-FY24. This growth in total income can be attributed to a combination of improved net interest income and other operating revenues.

On a standalone basis, Yes Bank reported a profit of ₹553.04 crore, which is a 145.6% increase from ₹225.21 crore during Q2-FY24. This performance underscores the bank's consistent ability to enhance its profitability on all fronts.

Net Interest Income (NII)

The bank's Net Interest Income (NII), which is the difference between the interest earned on loans and the interest paid on deposits, stood at ₹2,200 crore for Q2-FY25. This figure represents a 14.3% YoY increase, showcasing the bank's strong lending growth and effective interest rate management.

The Net Interest Margin (NIM) remained stable at 2.4%, indicating that Yes Bank has effectively managed its interest income relative to its assets.

Advances and Deposits

Yes Bank reported net advances of ₹2,35,117 crore, achieving a 12.4% YoY growth. The loan book is well-diversified, with a split of 59% in Retail & SME, 16% in Mid Corporate, and 25% in Corporate segments. This diversified approach helps mitigate risks associated with any single segment.

The bank's fresh disbursements remained robust at ₹23,998 crore, contributing to an overall balance sheet growth of 14.5% YoY. This indicates strong demand for credit across various sectors, supported by the bank's strategic initiatives.

Total deposits increased to ₹2,77,214 crore, reflecting an 18.3% YoY growth. The Current Account, Savings Account (CASA) ratio stood at 32%, indicating a healthy proportion of low-cost deposits.

Notably, the current account balances grew by 26.2% YoY, while savings account balances increased by 30.5% YoY. This growth in CASA deposits is crucial for maintaining lower funding costs and improving profitability.

Asset Quality

Yes Bank's asset quality has seen notable improvements, with gross NPAs reported at ₹3,889.4 crore and net NPAs at ₹1,168 crore during the quarter.

The gross NPA ratio improved to 1.6%, down from 2.0% in Q2-FY24, indicating effective management of non-performing assets. Similarly, the net NPA ratio decreased to 0.5%, compared to 0.9% in the same quarter last year.

The NPA Provision Coverage Ratio (PCR) stood at 70.0%, demonstrating the bank's preparedness for potential credit losses.

For Q2-FY25, the bank recorded gross slippages of ₹1,314 crore, with an overdue book of ₹3,762 crore categorized as 31-90 days overdue.

Key Developments and Strategic Objectives

During this quarter, Yes Bank received credit rating upgrades from both CRISIL and CARE, with its Basel III Tier II Bonds and Infrastructure Bonds ratings upgraded to A+ from A. This external validation reflects the bank's improving financial stability and risk management practices.

Yes Bank also announced the appointment of key personnel, including Nirav Dalal as Country Head for Financial Markets and Sumit Bali as Country Head for Retail Assets & Debt Management. These appointments are expected to strengthen the bank's management team and drive growth in key areas.

Prashant Kumar, Managing Director & CEO of Yes Bank, stated that the Q2-FY25 performance has been encouraging, especially considering the prevailing industry headwinds. The bank has maintained a strong deposit momentum and a healthy CASA ratio, supported by significant growth in both current and savings accounts.

The bank continues to focus on SME and Mid Corporate segments, while also resuming growth in the Corporate segment. This balanced approach is aimed at enhancing profitability while maintaining a strong asset quality profile.

Conclusion

Yes Bank's performance in Q2-FY25 showcases significant progress in profitability, asset quality, and growth across key metrics. The substantial increase in profit and net interest income reflects the bank's strategic initiatives and operational efficiencies.

With continued focus on maintaining a healthy loan portfolio and strong deposit growth, Yes Bank is well-positioned to navigate challenges in the banking sector while delivering value to its stakeholders. The positive credit rating upgrades further enhance confidence in the bank's ability to sustain growth and profitability.