YESBANK - Yes Bank Ltd. Share Price

In the Q3 FY '26 earnings call, YES Bank management provided an optimistic outlook centered on profitable growth, aiming for a full-year return on assets (ROA) of 1% for FY '27 and 1.5% in the mid-term. Emphasizing a strong core operating performance, the bank reported a net profit of INR 952 crores, an increase of 55% YoY and 45% QoQ. Notably, the net profit, adjusted for a gratuity provision impact, reaches INR 1,068 crores, resulting in an annualized ROA of 1%.

Management highlighted that advances totaled INR 2.57 lakh crores with a healthy 2.9% QoQ growth and 5.2% YoY. The retail segment constitutes about 47% of total advances, demonstrating a strategic focus on granular, profitability-driven lending. Despite heightened competition, retail deposits grew robustly at 12% YoY, with current account balances increasing by 19.4% and savings accounts by 16.3% YoY, reflecting a shift towards granular retail funding.

Asset quality improved, with gross NPAs declining to 1.5% from 1.6%, and net NPAs stable at 0.3%. The provision coverage ratio increased to 83.3%. Management reiterated a commitment to sustained credit quality and improvement in slippage ratios, which are at their lowest in eight quarters.

Key forward-looking points include a projection that the cost-to-income ratio will further improve as income accelerates, a strong focus on cost optimization, and the continual enhancement of fee income through digital and cross-sell opportunities. Additionally, the bank plans to maintain a gradual rundown of low-yielding RIDF balances, targeting to reduce them below 5% of total assets by FY '27, contributing positively to profitability metrics.

Q1: "Pankaj Agrawal: How much cumulative recovery has been done from the book delivered to JC Flower of around INR 48,000 crores? Is there any legacy slippage still left?"

A1: "We have recovered INR 7,500 crores from the ARC since assignment. There's approximately INR 1,800 crores in outstanding Security Receipts yet to be monetized, so there's potential for further recovery."

Q2: "Pankaj Agrawal: How long until we see profitability from Retail Banking?"

A2: "Our Retail business has now breakeven this quarter. We expect its contribution to profitability will significantly improve, given our past investments in this segment and the ongoing positive changes in asset quality."

Q3: "Jayant Kharote: Why the slight decline in Retail disbursals Quarter-on-Quarter?"

A3: "Despite a nominal dip in the last quarter, Retail disbursals rose by 15% year-on-year. We anticipate a rebound in disbursements in this current quarter, showing improved underwriting confidence."

Q4: "Jayant Kharote: What's the outlook for CASA growth?"

A4: "We have been improving our overall deposit growth, and though CASA growth is challenging, our retail deposits are increasing significantly, reflecting operational strength and trust from our customers."

Q5: "Jai Mundhra: What's behind the high gratuity provision compared to other banks?"

A5: "Our gratuity liability calculation considers a shift in the basic pay structure, aligning with regulations. We chose to make a one-time comprehensive provision to avoid future earnings impact from potential regulatory interpretations."

Q6: "Sucrit D. Patil: How will YES Bank differentiate itself in Retail and SME lending?"

A6: "Our SME loans comprise 29.3% of advances, showcasing our strong growth. We're committed to pursuing profitable growth and entering promising segments like wealth management while avoiding high-risk asset classes."

Q7: "Anurag Khurana: When can we expect dividends from YES Bank?"

A7: "While we appreciate your support, it's hard to specify a timeline for dividends. We need to ensure ongoing strong performance before making any commitments. We will discuss it substantively at the right time."

Q8: "Dev Dey: What's the target for advances growth?"

A8: "We're focused on profitable loan growth rather than simply increasing the top line. For the current financial year, we're looking for around 8%, aiming to align with market growth trends next year."