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

Yes Bank has reported a significant 55.4% year-on-year (YoY) increase in its standalone net profit for the third quarter of fiscal year 2026, reaching ₹952 crore. The robust performance, announced on January 17, 2026, was primarily driven by a sharp reduction in provisions for bad loans and steady growth in net interest income. The private lender's profit also saw a sequential jump of 45.4% from the ₹654 crore reported in the September 2025 quarter, signaling strengthening financial health.

Detailed Earnings Performance

The bank's Net Interest Income (NII), the difference between interest earned and interest paid, grew by 10.9% YoY to ₹2,466 crore. This growth was supported by a lower cost of funds and an improved balance sheet composition. Non-interest income, which includes fees and other revenues, rose 8% YoY to ₹1,633 crore. Consequently, the bank's total income for the quarter increased by 9.7% YoY to ₹4,098 crore.

Operating expenses for the quarter rose by 7.8% YoY to ₹2,865 crore. This figure includes a one-time provision of ₹155 crore for gratuity, linked to changes under new labour codes. Excluding this one-off impact, the bank's operating profit saw a substantial 28.7% YoY increase to ₹1,389 crore, highlighting effective cost management. The reported operating profit, including the provision, stood at ₹1,234 crore, up 14.3% from the previous year.

Profitability Boosted by Lower Provisions

A key factor behind the surge in profitability was the significant decline in provisions and contingencies. The bank set aside only ₹22 crore for the quarter, a steep 91.5% drop from the ₹259 crore provisioned in the same quarter of the previous fiscal year. This drastic reduction in credit costs directly contributed to the higher profit before tax, which jumped 47.7% YoY to ₹1,212 crore.

The bank's efficiency and profitability metrics also showed marked improvement. The Net Interest Margin (NIM) expanded to 2.6%, an increase of 20 basis points (bps) YoY and 10 bps sequentially. The cost-to-income ratio improved to 66.1% from 71.1% a year ago, when adjusted for the one-time gratuity impact, indicating better operational efficiency.

Strengthening Asset Quality

Yes Bank continued to make significant strides in improving its asset quality. The Gross Non-Performing Asset (GNPA) ratio declined to 1.5% as of December 31, 2025, down 10 bps from both the previous quarter and the same quarter last year. The Net Non-Performing Asset (NNPA) ratio improved to 0.3%, down 20 bps YoY and stable sequentially.

The Provision Coverage Ratio (PCR) strengthened to 83.3%, up from 71.2% in Q3 FY25, providing a healthier buffer against potential loan losses. Gross slippages, or new bad loans, reduced to ₹1,050 crore, equivalent to 1.6% of advances, marking the lowest level in eight quarters. The bank also reported strong recoveries and upgrades totaling ₹1,224 crore during the quarter.

Key Financial Highlights for Q3 FY26 (YoY)

Balance Sheet and Business Growth

The bank's balance sheet showed steady growth. Net advances increased by 5.2% YoY to ₹2,57,451 crore, driven by momentum in retail, commercial, and corporate banking segments. Total disbursements for the quarter stood at ₹26,982 crore, up 7% YoY, with retail asset disbursements growing by a robust 15%.

On the liability side, total deposits grew by 5.5% YoY to ₹2,92,524 crore. The bank demonstrated strong performance in gathering low-cost deposits, with Current Account and Savings Account (CASA) deposits rising 8.5% YoY to ₹99,483 crore. The CASA ratio improved to 34% from 33.1% a year earlier, helping to lower the overall cost of funds.

Management Commentary and Outlook

Prashant Kumar, Managing Director and CEO of Yes Bank, described the quarter as a "breakthrough" period for the bank. He highlighted the combination of accelerated profitability, sharp improvement in asset quality, and strong momentum in business volumes. "The Bank's Quarterly RoA (excluding the gratuity impact) has touched the critical milestone of 1.0% for the first time since reconstruction," Kumar stated. He attributed this to expanded NIMs, buoyant fee income, and tight cost control.

Looking ahead, Kumar expressed confidence in the bank's trajectory. "With disbursement momentum gathering pace, particularly in Retail, we expect to see acceleration in growth over the coming quarters," he added. The bank also continued its physical expansion, adding 33 new branches in Q3, bringing the total for the first nine months of FY26 to 76 branches.

Market Reaction

Ahead of the results announcement, shares of Yes Bank closed at ₹23.46 on January 16, 2026, marking a gain of 2.22%. The strong quarterly performance and positive management outlook are likely to be viewed favorably by investors, reflecting the bank's continued turnaround and progress toward its strategic goals.