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Yes Bank’s Q3 FY25 Results: Profits Soar 164%, CASA Ratio at New High!

 

Yes Bank Q3 FY25: A Strong Quarter with Promising Growth Trends

Yes Bank’s Q3 FY25 financial results showcase a significant leap in profitability and operational efficiency, driven by strategic growth in SME and mid-corporate segments and robust deposit mobilization. Here’s an in-depth look at the bank’s performance and future trajectory.

Key Financial Highlights

Profitability:

  • Net Profit surged to ₹612 crores, marking a 2.6x increase year-on-year (YoY) and a 10.7% rise quarter-on-quarter (QoQ).
  • Operating Profit grew by 24.9% YoY to ₹1,079 crores.
  • Net Interest Income (NII) recorded a 10.2% YoY growth, reaching ₹2,224 crores, with stable Net Interest Margins (NIMs) at 2.4%.
  • Non-interest income increased by 26.6% YoY to ₹1,512 crores, driven by strong fee income growth.

Cost Efficiency:

  • The cost-to-income ratio improved sequentially to 71.1%, indicating better operational management.

Provisions:

  • Non-tax provisions reduced by 53.4% YoY to ₹259 crores, signaling improved asset quality.

Asset Quality:

  • Gross Non-Performing Assets (GNPA) reduced to 1.6%, and Net NPA (NNPA) was steady at 0.5%.
  • Provision Coverage Ratio (PCR) improved to 82.4%, reflecting robust provisioning against bad loans.

Balance Sheet Dynamics

Advances and Deposits:

  • Advances grew by 12.6% YoY to ₹2,44,834 crores, with SME and mid-corporate segments leading the growth at over 26%.
  • Deposits increased by 14.6% YoY to ₹2,77,224 crores, supported by a higher CASA ratio of 33.1%.

Liquidity and Capital:

  • Average Liquidity Coverage Ratio (LCR) was healthy at 133.2%.
  • CET 1 ratio stood at 13.3%, indicating strong capital adequacy.

Strategic Highlights from Management

  1. Growth Focus:

    • SME and mid-corporate segments have been prioritized, achieving over 25% growth YoY.
    • Retail lending has been recalibrated to focus on profitability rather than volume growth.

  2. Asset Quality Improvements:

    • Reduction in mandated deposits for priority sector lending shortfalls to 8.5% of total assets from 10.4% in Q2 FY25.
    • Flat retail fresh slippages QoQ, highlighting stable credit management.

  3. Operational Advancements:

    • Sequential improvements in cost-to-income ratios reflect enhanced operational efficiency.

Initiatives and Future Plans

  1. Product Innovation:

    • Launch of YES Business, a comprehensive app for MSMEs, featuring over 100 tools to simplify business operations.
    • Partnership with FICCI FLO to introduce 'YES PowherUp,' empowering women entrepreneurs.

  2. Leadership Strengthening:

    • Appointment of a new Executive Director, further solidifying the bank’s governance.

  3. Digital and Retail Expansion:

    • Continued emphasis on growing CASA deposits through retail and branch banking initiatives.

Challenges to Watch

  • Flat Net Interest Margins (NIMs) suggest limited improvement in interest income spreads.
  • Rising overdue balances in rural retail indicate potential stress in specific portfolios.

Conclusion

Yes Bank’s Q3 FY25 results underscore its solid progress in profitability, asset quality, and operational metrics. The bank’s strategic pivot towards SME and mid-corporate lending and its focus on digital innovation and women empowerment lays a strong foundation for sustainable growth. However, close monitoring of overdue balances and margin pressures remains crucial to maintaining this upward trajectory.

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