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Yes Bank's financial performance for the third quarter of fiscal year 2025 (Q3FY25) has showcased a remarkable surge in profitability. The bank reported a net profit of ₹612 crore, representing a substantial 164.5% increase compared to the ₹231 crore earned during the same period in the previous year. This impressive growth also reflects a 10.7% sequential improvement from the previous quarter, demonstrating consistent financial progress. The key drivers of this success can be attributed to a strategic focus on enhancing margins, increasing fee income, and implementing cost-cutting measures. Despite navigating a challenging economic landscape marked by fluctuating liquidity, deposit levels, and mixed economic indicators, the bank has successfully achieved five consecutive quarters of expanding net profits. This sustained positive trajectory underscores the effectiveness of Yes Bank's strategic initiatives and its ability to adapt to dynamic market conditions. The bank's commitment to managing costs is evident in the modest year-on-year increase of operating expenses, allowing for improvements in cost-to-income ratios.
A significant factor contributing to Yes Bank's improved financial standing is the robust growth in its net interest income (NII). NII increased by 10.2% year-on-year, reaching ₹2,224 crore. This positive trend is further enhanced by the stability of net interest margins (NIMs) at 2.4%. The bank's non-interest income also experienced impressive growth, rising by 26.6% year-on-year to ₹1,512 crore. This substantial increase in non-interest income, combined with the growth in NII, contributed to a 16.3% year-on-year rise in total net income, reaching ₹3,736 crore. This demonstrates the success of the bank's diversification strategy and its ability to generate revenue streams beyond traditional interest income. The bank's ability to maintain stable NIMs while increasing NII highlights its effective management of interest rate risks and its ability to optimize its lending portfolio.
The improvement in Yes Bank's asset quality is another noteworthy aspect of its Q3FY25 performance. The gross non-performing asset (GNPA) ratio decreased from 2.0% in Q3FY24 to 1.6%, indicating a significant reduction in the proportion of non-performing loans. Similarly, the net NPA ratio experienced a considerable decline, falling from 0.9% to 0.5%. This improved asset quality has had a direct positive impact on provisions, which decreased by a significant 53.4% year-on-year to ₹259 crore. The lower provision requirements reflect the enhanced credit risk profile of the bank's loan portfolio. This improvement in asset quality is a testament to the bank's effective risk management strategies and its focus on prudent lending practices. The decline in provisions has directly contributed to the substantial increase in net profit reported for the quarter. The bank’s focus on increasing priority sector loans, reducing reliance on low-yield RIDF investments, further contributed to protecting margins.
Yes Bank's deposit growth remains strong, with a 14.6% year-on-year increase reaching ₹2,77,224 crore. This growth is supported by a 15.7% rise in average deposit balances, indicating increased customer confidence and trust in the bank. The improvement in the current account and savings account (CASA) ratio to 33.1% from 29.7% in the previous year is particularly noteworthy. A higher CASA ratio demonstrates increased customer stickiness and lower reliance on expensive funding sources. The increase in advances by 12.6% year-on-year to ₹2,44,834 crore, particularly in the SME and mid-corporate lending segments (both up by 26.7%), indicates a healthy demand for credit and the bank's ability to capitalize on growth opportunities. The sustained growth in deposits and advances underscores the bank's ability to attract new customers and build strong relationships with existing ones.
The strengthening of Yes Bank’s capital position further strengthens investor confidence. The provision coverage ratio, inclusive of technical write-offs, has improved to 82.4% from 71.9% in the previous year, signifying a more robust provision against potential losses. The bank's capital adequacy ratio stands at a healthy 15.9%, with the CET-1 ratio at 13.3%, well above regulatory requirements. These strong capital ratios demonstrate the bank's financial resilience and its ability to absorb potential shocks. The improved financial metrics, coupled with the strategic focus on improving margins, fee income, and cost efficiency, paint a positive picture of Yes Bank's financial health and future prospects. The bank's consistent performance across several key financial indicators provides evidence of a sustainable turnaround and reinforces its position within the competitive Indian banking sector.
Source: Yes Bank Q3FY25 net profit rises 164% to Rs 612 crore