YES Bank Q4 Update: Loans Grow 11%, But Analysts Remain Cautious

Introduction

YES Bank will be in focus on Monday, April 6, 2026, after releasing its business update for the fourth quarter of the financial year 2025-26. The private lender reported double-digit growth in both loans and deposits, continuing a trend of balance sheet expansion. However, this update follows a period of stock underperformance and cautious commentary from financial analysts, who remain focused on the bank's core profitability and return ratios. The bank also recently received a minor revision in its ESG rating.

Q4 FY26 Business Performance Highlights

In its latest business update, YES Bank announced that its loans and advances grew by 10.7% year-on-year (YoY) to reach ₹2,72,454 crore for the quarter ended March 31, 2026. This marks a 5.8% increase from the preceding quarter (QoQ). The bank's deposit base also saw robust growth, increasing by 12.1% YoY to ₹3,18,970 crore. On a sequential basis, deposits were up by 9%. These figures suggest a steady momentum in the bank's efforts to expand its core business operations.

Deeper Dive into Deposits and Ratios

The growth in deposits was supported by an improvement in the Current Account Savings Account (CASA) ratio, which rose to 35.1% in the March quarter. This is an improvement from 34% in the December 2025 quarter and 34.3% in the same quarter last year. In absolute terms, CASA deposits increased by 14.9% YoY to ₹1,11,960 crore. However, some key operational ratios showed a decline. The Credit to Deposit (C/D) ratio fell to 85.4% from 86.5% a year ago and 88% in the previous quarter. The Liquidity Coverage Ratio (LCR) also moderated to 119% from 125% YoY and 123.8% QoQ.

Context from Q3 FY26 Earnings

To understand the market's cautious stance, it is important to look at the bank's performance in the third quarter ended December 31, 2025. YES Bank reported a 55% YoY jump in standalone net profit to ₹952 crore. While this appeared strong, the growth was primarily driven by a steep 91% YoY decline in provisions for bad loans. Analysts noted that this improvement was not supported by a significant acceleration in core operational growth or sustainable returns. The bank's net interest income (NII) grew by a more modest 11% YoY to ₹2,466 crore, with net interest margin (NIM) improving slightly to 2.6%.

Analyst Commentary and Market Concerns

Despite the headline growth numbers, several brokerage firms have maintained a bearish outlook on YES Bank. JM Financial Services recently reiterated its 'sell' rating and lowered its target price to ₹16 from ₹19, citing higher cost of equity and macroeconomic uncertainty. Other firms like Emkay Global and Citi also hold 'sell' ratings. The consensus among analysts is that the bank's credit growth remains anemic, particularly in the retail segment, and its return on equity continues to be sub-par compared to its peers. There is a prevailing view that the bank's profitability is overly dependent on recoveries from non-performing assets rather than a structural improvement in its core earnings quality.

Stock Performance and Valuation

Reflecting these underlying concerns, YES Bank's stock has been under pressure. The shares settled at ₹17.85 on the last trading day, down 17% in 2026 so far and nearly 12% in the last month alone. The stock is trading 27% below its 52-week high of ₹24.30. This performance indicates that investors are looking beyond the reported profit and deposit growth, focusing instead on the challenges related to sustainable profitability and weak return metrics. The stock's valuation is considered demanding by some analysts given its modest growth profile.

Other Corporate Developments

In a separate filing, YES Bank informed the exchanges that NSE Sustainability has revised its Environmental, Social, and Governance (ESG) rating to '77' in the 'leader' category for FY 2024-25, a slight moderation from '78' previously. The bank clarified that it had not engaged the agency for this rating. While a minor development, it adds to the news flow surrounding the lender.

Conclusion

The Q4 business update for YES Bank presents a mixed picture. While the growth in loans and deposits is a positive sign of operational activity, the market and analysts remain focused on deeper issues. The decline in key ratios like LCR and C/D, coupled with persistent concerns over weak core profitability and sub-par return ratios, continues to weigh on investor sentiment. The stock's recent underperformance suggests that a sustained turnaround will require more than just balance sheet growth; it will need a clear and convincing improvement in core earnings quality.