Yes Bank Q3 Profit Soars 55% to ₹952 Crore in FY26

Introduction to Q3 Performance

Yes Bank announced a robust financial performance for the third quarter of fiscal year 2026, with standalone net profit climbing 55.4% year-on-year to ₹952 crore. This significant growth from ₹612 crore in the same period last year was primarily driven by higher net interest income, improved margins, and a substantial reduction in credit costs. On a sequential basis, the bank's profit grew by 45.4% from ₹654 crore reported in the second quarter of FY26. The results reflect a continued turnaround and strengthening of the bank's core operations and balance sheet.

Detailed Financial Breakdown

The bank's Net Interest Income (NII) for the quarter ended December 31, 2025, increased by 10.9% year-on-year to ₹2,466 crore. This growth was supported by a reduction in the cost of funds and an expansion in Net Interest Margin (NIM), which improved to 2.6%, up 20 basis points YoY and 10 basis points QoQ. Non-interest income also contributed positively, rising 8% YoY to ₹1,633 crore. Consequently, the bank's total income for the quarter saw a 9.7% YoY increase, reaching ₹4,098 crore.

Operating expenses rose by 7.8% YoY to ₹2,865 crore. This figure includes a one-time gratuity provision of ₹155 crore related to new labour codes. Excluding this impact, operating expenses grew by a modest 2% YoY. The bank's operating profit stood at ₹1,234 crore, marking a 14.3% YoY increase. When adjusted for the one-time provision, the operating profit showed a stronger growth of 28.7% YoY to ₹1,389 crore, highlighting improved operational efficiency. The cost-to-income ratio improved significantly to 66.1% from 71.1% a year ago.

Asset Quality Continues to Strengthen

Yes Bank reported a marked improvement in its asset quality during the third quarter. The Gross Non-Performing Assets (GNPA) ratio declined to 1.5%, an improvement of 10 basis points both year-on-year and quarter-on-quarter. The Net Non-Performing Assets (NNPA) ratio improved to 0.3%, down from 0.5% in the same quarter of the previous year. The Provision Coverage Ratio (PCR) strengthened considerably to 83.3%, compared to 71.2% in Q3 FY25.

Gross slippages for the quarter reduced to ₹1,050 crore, equivalent to 1.6% of advances, which is the lowest level recorded in eight quarters. Recoveries and upgrades remained strong at ₹1,224 crore. Provisions for bad loans and other contingencies saw a sharp decline of 91.5% annually, falling to just ₹22 crore from ₹259 crore a year earlier. This drastic reduction in provisioning was a key contributor to the surge in net profit.

Key Financial Highlights (Q3 FY26 vs Q3 FY25)

Balance Sheet and Business Momentum

The bank's balance sheet showed steady growth. Net advances increased by 5.2% YoY and 2.9% QoQ to reach ₹2,57,451 crore. Total disbursements for the quarter grew by 7% YoY to ₹26,982 crore, with retail asset disbursements showing a stronger growth of nearly 15% YoY. On the liabilities side, total deposits grew by 5.5% YoY to ₹2,92,524 crore. The bank continued to show strong performance in low-cost deposits, with CASA (Current Account and Savings Account) deposits rising 8.5% YoY to ₹99,483 crore. This led to an improvement in the CASA ratio to 34.0% from 33.1% a year ago.

Management Commentary and Strategic Outlook

Prashant Kumar, Managing Director and CEO of Yes Bank, described the quarter as a "breakthrough" period for the bank. He highlighted the acceleration in profitability, sharp improvement in asset quality, and momentum in business volumes. He noted that the bank's quarterly Return on Assets (RoA), excluding the gratuity impact, reached the 1.0% milestone for the first time since its reconstruction. This was driven by higher NIMs, buoyant fee income, and tight cost control. Kumar also emphasized that negligible net credit costs were supported by the lowest slippage ratio in eight quarters and continued redemptions from the security receipts portfolio.

Operational Developments and Market Reaction

Operationally, Yes Bank continued its network expansion by opening 33 new branches in Q3, taking the total for the first nine months of FY26 to 76 branches. A significant strategic development was the bank's inclusion in the NIFTY Bank Index, effective December 31, 2025. Ahead of the results announcement, shares of Yes Bank closed at ₹23.46 on January 16, 2026, up 2.22%.

Conclusion

Yes Bank's third-quarter results for FY26 demonstrate a strong and sustained recovery. The significant jump in profitability, coupled with strengthening asset quality and steady business growth, indicates that the bank is on a firm footing. The management's focus on improving operational efficiency, controlling costs, and growing its granular deposit base has yielded positive results. With these tailwinds, the bank appears well-positioned to continue its growth trajectory and deliver on its strategic objectives.