Yes Bank records stellar Q2 FY2025 profit growth amid strong deposit momentum

Yes Bank reported impressive financial results for Q2 of FY2025, showcasing a 145.6% year-over-year profit jump to INR 553 crore. This surge was fueled by a stable increase in Net Interest Income (NII) and significant non-interest income growth, solidifying the bank’s progress in profitability amid industry challenges.

Net Interest Income and Non-Interest Income Boost Overall Profitability

Yes Bank’s Q2 FY2025 Net Interest Income reached INR 2,200 crore, marking a 14.3% year-over-year increase. Despite industry headwinds, the bank managed to stabilize its Net Interest Margin (NIM) at 2.4%. Additionally, the bank’s non-interest income surged 16.3% year-over-year to INR 1,407 crore, driven by a mix of fee-based income and transactional revenue streams.

Yes Bank’s Chief Executive Officer Prashant Kumar commented that the bank’s strategy has been to leverage its stable deposit growth and strengthen asset quality, aligning well with its long-term profitability goals. Kumar pointed out that the NII boost, combined with a proactive approach to expanding its corporate and SME loan book, is steering Yes Bank toward sustained growth.

Deposit Growth Fuels Enhanced CASA Ratio

Yes Bank also reported robust deposit growth, with total deposits rising 18.3% year-over-year to INR 2,77,214 crore. The bank’s Current Account Savings Account (CASA) ratio improved to 32%, a 2.6% year-over-year increase. The CASA growth, according to Yes Bank, was primarily supported by a 26% year-over-year growth in Current Account deposits and a 30% rise in Savings Account balances.

Furthermore, Yes Bank’s Credit Deposit (CD) ratio decreased slightly to 84.8%, a positive indicator of stable liquidity, aligning with the bank’s emphasis on maintaining a sustainable deposit base.

Improved Asset Quality and Reduced NPA Ratios

Yes Bank continued to show progress in managing asset quality, with the Gross Non-Performing Assets (GNPA) ratio falling to 1.6% in Q2 FY2025, compared to 2.0% in Q2 FY2024. The Net NPA ratio also stabilized at 0.5%, reflecting the bank’s aggressive strategy to address legacy issues. The Provision Coverage Ratio (PCR) for NPAs rose significantly to 70% from 56.4% last year.

The bank’s quarterly report cited steady resolution of non-performing assets and improved recovery rates as central to its asset quality strategy. Yes Bank recorded total recoveries and resolutions of INR 1,021 crore during Q2 FY2025.

Expansion in SME and Mid-Corporate Lending

Yes Bank’s lending portfolio showed substantial growth in the SME and Mid-Corporate sectors, with year-over-year growth rates of 25.8% and 25.5%, respectively. Kumar highlighted the strategic focus on diversifying the loan book and gradually reducing retail lending to boost profitability. Corporate advances similarly grew by 21.8% year-over-year, signaling renewed confidence in the corporate lending market.

Analyst Reaction and Stock Performance

Market analysts lauded Yes Bank’s Q2 performance, particularly its asset quality improvement and robust CASA growth, marking these as indicators of solid foundational stability. However, they flagged the slight uptick in operating costs and provisions as areas to monitor in upcoming quarters.

Following the announcement, Yes Bank’s stock showed moderate gains, reflecting investor confidence in the bank’s steady recovery trajectory.