The private lender more than doubled profit year over year for the July-September quarter of FY25.
According to a better-than-expected performance on many parameters YES Bank Jumps the core of its net interest income in growth-improved deposit metrics at a pace, YES bank topped estimates for the Jul-Sept quarter of this year, largely due to factors mentioned above.
For Q2FY25, YES Bank has reported a phenomenal two-fold YoY increase in net profit at ₹553 crore against ₹225 crore for the same quarter last year. This shows a considerable improvement in the bank’s financial strength. NII, an important barometer of revenue, was also up by 14.3% YoY at ₹2,200 crore against ₹1,925 crore in Q2FY24, supported by stable interest rates and robust loan growth across industries.
Improvement in Asset Quality
YES Bank has managed to improve its asset quality by having a gross non-performing asset (GNPA) ratio improve by a minor percentage point from 1.7% in the previous quarter to 1.6% in Q2FY25. The net NPA ratio remains at 0.5%, and this indicates that the bank is reducing the non-performing assets, which gives the impression that it manages the credit risk effectively, making the loan portfolio sounder.
Operational Efficiency Improved
Cost to income ratio, a measure of operational efficiency improved to 73% in Q2FY25 compared to 74.4% in Q2FY24 and 74.3% in the earlier quarter. RoA for Q2FY25 was 0.5% which had risen from 0.2% YoY but was at par with that of the previous quarter. It is seen that the YES Bank has strategically streamlined its operations and strengthened the bottom line.
Strat commended deposit growth along with CASA Improvement
TOTAL Deposits: ₹2.7 lakh crore YoY at 18.3 per cent QoQ Growth was 4.6 per cent CASA was enhanced at 32 per cent. This was higher in the current quarter as compared to the previous, while also it had improved one percentage of YoY, 30.8 per cent, on YoY, 29.4 per cent, YLY.
CEO’s Positive Expectation
Prashant Kumar, MD & CEO, of YES Bank, said: “Our performance this quarter is encouraging, especially amid industry challenges. We have maintained deposit momentum alongside a healthy CASA ratio of 32%, driven by current and savings account growth.” Kumar mentioned that the bank was targeting the expansion of SME and mid-corporate segments to further strengthen its market position.
Stock Performance in the Face of Market Headwinds
The Q2FY25 was a good one for YES Bank, but the stock performance has been under pressure in the last three months with a decline of over 16%. The stock has outperformed the broader Nifty 50 index and has dipped by more than 2% during the same period. It is a good sign for investors’ confidence in the strategic direction and improvement in the financials of YES Bank, especially in this challenging market environment.
Takeaways and Outlook
The Q2FY25 has indeed been a solid turnaround performance by YES Bank with good improvement in profitability, as well as good deposit growth and cost efficiency. Added to that, the focus efforts by the bank through strategic growth in the SME and mid-corporate sectors will make the bank continue growing from here. All said, the challenges with the banking sector are alive, but the steady and sustained core financial growth by the company along with further expansion in market share positions the company on the correct growth curve.
The Q2FY25 performance of YES Bank is a testimony to the resilience and strategic focus the bank has had as it moves into a very critical milestone of its recovery journey. While investors may continue to track the performance of the bank, especially as it looks to sustain growth under overall economic and industry headwinds, the outlook for YES Bank remains cautiously optimistic, with improvement in asset quality, operational efficiency, and a bolstered deposit base.
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