YES BANK's Q2 FY26: A Quarter of Robust Growth and Strategic Clarity

YES BANK Limited has announced its financial results for the second quarter of fiscal year 2026 (Q2 FY26), showcasing a period of robust growth and strategic execution. The bank reported a Net Profit of INR 654 crore, marking a significant 18.3% year-on-year (YoY) increase. When normalized for income tax refunds received in Q2 FY25, the profit growth stands even higher at approximately 30% YoY. This strong performance is underpinned by a healthy growth in Operating Profit, which surged by 32.9% YoY to INR 1,296 crore.

The bank's total income for Q2 FY26 reached INR 3,945 crore. Net Interest Income (NII) contributed INR 2,301 crore, representing 58.33% of the total income and a 4.6% YoY growth. Non-Interest Income stood at INR 1,644 crore, accounting for 41.67% of the total. Within Non-Interest Income, core fees amounted to INR 1,499 crore, while realized/unrealized gains on investments were INR 145 crore. The core fee income saw contributions from various segments, including FX Income (INR 234 crore), Trade & CMS (INR 287 crore), Third-party Product (INS/INV) (INR 246 crore), Loan Processing Fee & Prepayment Charges (INR 261 crore), Card Product fees (INR 257 crore), and General Banking & Others (INR 213 crore). This diversified income stream highlights the bank's efforts to enhance non-interest revenue.

Strategic Momentum and Asset Quality Improvement

YES BANK demonstrated sustained momentum in deposits, with total deposits growing by 6.9% YoY and 7.4% quarter-on-quarter (QoQ) to INR 2,96,276 crore. This growth was particularly strong in CASA (Current Account Savings Account) deposits, which increased by 12.5% YoY. The CASA ratio improved to 33.7%, up 170 basis points YoY and 90 basis points QoQ, reflecting the bank's strong franchise and effective deposit strategy. Retail and Branch Banking-led deposits grew by 13.7% YoY, with a CASA ratio of 39.6% in this segment.

On the advances front, the bank crossed a significant milestone, with total advances reaching INR 2,50,212 crore, growing by 6.4% YoY and 3.8% QoQ. The management noted a strong pickup in disbursements across all customer segments, with Retail segment disbursements growing approximately 20% QoQ. The bank's risk-based calibration in the Retail segment is largely complete, and stronger traction is expected going forward. Commercial and Corporate segments also saw nearly doubled sanction and new limit setups sequentially.

Asset quality continued to improve, with fresh slippages reducing to 2% of advances from 2.4% in the previous quarter. Overdue advances also decreased across segments. The Provision Coverage Ratio (PCR) improved to 81%, one of the best among peers. The Gross Non-Performing Asset (GNPA) ratio remained flat at 1.6% QoQ and YoY, while the Net Non-Performing Asset (NNPA) ratio stood at 0.3%. This consistent improvement underscores the bank's proactive risk management and focus on a healthy loan book.

Operational Efficiency and Future Outlook

YES BANK maintained its Net Interest Margin (NIM) at 2.5%, flat QoQ and up 10 basis points YoY. The asset repricing impact was largely offset by a reduction in RIDF (Rural Infrastructure Development Fund) balances, lower high-cost borrowings, and deposit rate cuts. The bank anticipates NIMs to comfortably move upwards of 3% in the coming quarters, driven by term deposit repricing and continued RIDF reduction. The Cost-to-Income ratio remained flat at 67.1%, demonstrating tight control over operating costs, which marginally increased by 0.6% YoY but declined by 4.2% QoQ.

Key achievements during the quarter include SMBC (Sumitomo Mitsui Banking Corporation) becoming the largest shareholder with a 24.2% stake, further strengthening the bank's governance with the appointment of two SMBC nominee directors. The bank also received credit rating upgrades to AA- by CRISIL and India Ratings, reflecting its strengthened capital position and improved business performance. The bank is on track to open 80 new branches for the year, with 43 already operational, expanding its pan-India presence.

Management has guided for a Return on Assets (ROA) of 1% by FY27 and aims for double-digit loan growth for the current financial year, with Retail contributing 4-5%. The focus remains on profitable growth and leveraging the SMBC partnership to access new corporate clients and enhance transaction banking services. YES BANK's Q2 FY26 results reflect a bank that is strategically focused, operationally efficient, and poised for sustained, profitable growth, reinforcing investor confidence in its turnaround journey.