In the September quarter of FY25, Yes Bank Q2 results showcased a substantial increase in profitability, with standalone net profit soaring by 145% year-on-year (YoY) to reach Rs 553 crore. This impressive rise was largely driven by a 15% increase in interest income. The bank’s gross non-performing assets (NPAs) also demonstrated improvement, decreasing to 1.6% from 2% YoY, while net NPAs remained steady at 0.5% quarter-on-quarter (QoQ).
In comparison to the previous year’s September quarter, Yes Bank’s net profit nearly doubled, rising from Rs 225.21 crore to Rs 553 crore. This substantial growth reflects the bank’s strategic initiatives and ability to navigate a challenging economic environment effectively.
Strong Financial Performance in Yes Bank Q2 Results
The Yes Bank Q2 results indicated a solid performance across multiple financial metrics. Net Interest Income (NII), which represents the difference between the interest earned and the interest paid, was reported at Rs 2,200 crore for Q2FY25. This figure marked a 14.3% increase from the previous year. Net interest margins (NIMs), an important profitability metric, remained stable at 2.4% QoQ. Additionally, the net profit for Q2FY25 grew by 10% on a QoQ basis, while operating profit rose to Rs 975 crore, reflecting a 21.7% YoY and 10.2% QoQ increase.
Yes Bank’s interest expenses also saw a notable rise in the reported quarter, totaling Rs 5,530 crore. This marked a 15% YoY increase from Rs 4,786 crore in the same quarter last year. The growth in expenses can be attributed to the bank’s efforts to attract deposits and maintain a healthy balance sheet amidst a competitive banking landscape.
Non-Interest Income for Q2FY25, which includes fees, commissions, and other revenue sources, reached Rs 1,407 crore, demonstrating a 16.3% YoY increase and a 17.3% rise QoQ. The growth in non-interest income reflects the bank’s diversified approach to revenue generation, balancing interest income with other financial streams. Meanwhile, operating expenses experienced a 12.8% YoY increase and a 2.9% QoQ rise, indicating controlled spending in line with the bank’s operational growth.
Improvements in Asset Quality and Key Financial Ratios
The Yes Bank Q2 results also showed significant improvements in asset quality. Gross NPAs saw a reduction both YoY and QoQ, falling to 1.6% in Q2FY25 from 1.7% in Q1FY25 and 2% in Q2FY24. Net NPAs remained stable at 0.5% QoQ but exhibited a notable 40 basis point drop YoY, indicating improved asset quality and effective risk management.
The bank’s Cost-to-Income Ratio, a key efficiency measure, improved to 73.0% from 74.4% in Q2FY24 and 74.3% in Q1FY25. This improvement reflects better cost control and higher income generation, signaling operational efficiency. Return on Assets (RoA) for Q2FY25 stood at 0.5%, up from 0.2% in Q2FY24 and holding steady from Q1FY25. The rise in RoA underscores the bank’s enhanced profitability and efficient asset utilization.
Balance Sheet Growth and Strategic Focus
Yes Bank’s balance sheet continued to exhibit positive momentum, in line with its strategic objectives. Net advances—the total amount of money the bank has lent—were reported at Rs 2,35,117 crore, representing a 12.4% YoY increase and a 2.4% rise QoQ. The strong performance in net advances was driven by a robust disbursement of Rs 23,998 crore in Q2FY25, showcasing the bank’s focus on expanding its lending operations.
The total balance sheet grew by 14.5% YoY, demonstrating Yes Bank’s commitment to strengthening its financial position. Deposits rose to Rs 2,77,214 crore, marking an 18.3% increase YoY and a 4.6% growth QoQ. This deposit growth was complemented by an improved CASA (Current Account and Savings Account) ratio, which reached 32%, up from 29.4% YoY and 30.8% QoQ. A higher CASA ratio indicates a greater proportion of low-cost deposits, which contributes to improved profitability.
Yes Bank’s current account balances surged by 26.2% YoY and 11.1% QoQ, while savings account balances grew 30.5% YoY and 6.6% QoQ. The bank successfully opened 3.64 lakh retail CASA accounts in Q2FY25, indicating a successful strategy to attract individual depositors and build a stable funding base.
Management’s Optimism and Future Outlook
Prashant Kumar, MD & CEO of Yes Bank, expressed optimism about the Yes Bank Q2 results, highlighting the bank’s performance amidst industry headwinds. Kumar emphasized that the bank’s deposit growth remained robust, underpinned by a healthy CASA ratio of 32%. This growth was driven by substantial increases in both current and savings accounts. Additionally, he mentioned that the slippage ratio—representing the movement of accounts from performing to non-performing—remained within the target range.
Kumar pointed out that Yes Bank continues to deliver on its strategic objectives, with notable growth in the Small and Medium-sized Enterprise (SME) and mid-corporate segments. The bank is also witnessing renewed growth in its corporate segment while maintaining a targeted approach to retail banking to boost profitability. The bank has also managed to sustain zero shortfalls in Priority Sector Lending (PSL), a key regulatory requirement for banks.
Furthermore, Kumar highlighted recent leadership changes in Retail Assets and Financial Markets, which are expected to bolster the bank’s performance. He also noted that Yes Bank has seen positive external validation through credit rating upgrades over the last two quarters, indicating improved confidence among rating agencies regarding the bank’s financial health.
Steady Handling of Asset Quality Challenges
Gross slippages—representing the fresh addition of bad loans—for Q2FY25 were reported at Rs 1,314 crore, compared to Rs 1,263 crore in Q2FY24 and Rs 1,204 crore in Q1FY25. The slight increase in slippages indicates a cautious approach to managing risk, with the bank actively working to contain non-performing assets within acceptable levels.
Overall, the Yes Bank Q2 results paint a picture of a bank that is effectively navigating industry challenges while adhering to its strategic priorities. The bank’s focus on growing key segments, improving asset quality, and maintaining operational efficiency is evident in its solid financial performance. With a strong balance sheet, increased profitability, and strategic clarity, Yes Bank appears well-positioned to continue delivering value to its stakeholders in the coming quarters.
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