YES Bank Q2 FY25 Business Update

YES Bank Q2 FY25 Business Update: Key Highlights and Performance Overview

YES Bank, one of India’s leading private sector banks, has reported solid growth in deposits, loans, and CASA for the July-September quarter of FY25. The bank’s CASA (Current and Savings Account) base showed significant growth, contributing to the overall improvement in its deposit structure. Here’s a detailed breakdown of YES Bank’s performance for Q2 FY25:

Key Financial Metrics and Performance

1. CASA Growth:
   • YES Bank’s CASA rose by 28.4% YoY, reaching ₹88,559 crore for Q2 FY25. In comparison, it stood at ₹68,973 crore in the year-ago period.
   • The bank’s CASA ratio improved to 32% in Q2 FY25 from 29.4% YoY and 30.8% in the previous quarter. This indicates a steady improvement in low-cost deposit growth.
2. Total Deposits:
   • The bank’s total deposits grew by 18.3% YoY, reaching ₹2.77 lakh crore in the July-September quarter, compared to ₹2.34 lakh crore in the same quarter last year.
   • On a sequential basis, deposits increased by 4.6%, up from ₹2.65 lakh crore in Q1 FY25.
3. Loans and Advances:
   • The bank reported a 13.1% YoY rise in its loans and advances, which stood at ₹2.37 lakh crore in Q2 FY25, compared to ₹2.09 lakh crore in the year-ago period.
   • On a QoQ basis, loans and advances grew by 3%, rising from ₹2.3 lakh crore in the previous quarter.
4. Profit and Asset Quality:
   • In the April-June quarter, YES Bank had reported a 47% YoY rise in its profit after tax (PAT), reaching ₹502 crore. On a sequential basis, the bank’s net profit rose by 11.2%.
   • The gross non-performing assets (NPA) ratio remained stable at 1.7% in Q2 FY25, consistent with the previous quarter and lower than the 2% recorded in the year-ago period.
   • The net NPA ratio improved to 0.5% as of June 30, down from 0.6% QoQ and 1% YoY, showcasing better asset quality management.
5. Liquidity Coverage Ratio (LCR):
   • While YES Bank’s LCR saw a sequential decline, the bank continues to manage liquidity prudently, with CASA deposits forming a larger portion of its overall deposit base.

Analysis of YES Bank’s Q2 FY25 Performance

1. Strong CASA Growth:
   • The 28.4% YoY growth in CASA deposits highlights YES Bank’s ability to attract low-cost deposits, improving its funding base. The CASA ratio’s increase to 32% indicates growing customer trust and engagement.
2. Steady Deposit Growth:
   • With an 18.3% YoY growth in total deposits, YES Bank is steadily growing its deposit base, helping the bank maintain liquidity. The 4.6% QoQ growth in deposits suggests that the bank’s deposit mobilization strategies are working effectively.
3. Moderate Growth in Loans and Advances:
   • A 13.1% YoY rise in loans and advances is a positive sign, showing consistent demand for credit. However, the 3% QoQ growth suggests the bank is adopting a cautious approach to lending, possibly due to the challenging macroeconomic environment.
4. Profitability and Asset Quality:
   • The improvement in profitability, with a 47% YoY rise in PAT during the April-June quarter, reflects strong operational performance. The stable gross NPA and declining net NPA ratios demonstrate YES Bank’s improved asset quality and risk management capabilities.
5. Challenges in Liquidity Coverage:
   • The decline in the liquidity coverage ratio (LCR) could be a point of concern, as it suggests a slight dip in the bank’s short-term liquidity buffer. The bank will need to ensure that its liquidity management remains robust, especially in light of economic uncertainties.

Advantages of YES Bank’s Q2 FY25 Performance

1. Improving CASA Ratio: The rise in CASA deposits strengthens the bank’s low-cost deposit base, which is essential for maintaining profitability and managing margins.
2. Growth in Deposits: A 18.3% YoY growth in deposits shows the bank’s effective deposit mobilization and increasing customer base.
3. Enhanced Asset Quality: The stable 1.7% gross NPA ratio and reduction in net NPA to 0.5% highlight better management of stressed assets.
4. Profitability Boost: The 47% rise in PAT demonstrates operational efficiency and profitability, showing that the bank is on a solid recovery path.

Disadvantages and Risks

1. Slower Sequential Growth: While YoY growth is impressive, the sequential growth in deposits and loans is slower. This may indicate challenges in growing the bank’s balance sheet on a quarterly basis.
2. Liquidity Coverage Decline: The decline in LCR signals a potential risk to short-term liquidity management, which the bank will need to address promptly.
3. Competitive Pressures: YES Bank operates in a highly competitive banking sector, facing stiff competition from other private and public sector banks, which could impact its ability to expand market share.

Conclusion

YES Bank’s Q2 FY25 results reflect strong growth in CASA deposits and steady improvements in overall asset quality. The bank’s focus on expanding its low-cost deposit base while maintaining prudent lending practices is paying off. However, challenges remain in liquidity management and maintaining the momentum of sequential growth. The bank is poised for continued recovery and growth, but it will need to navigate the evolving macroeconomic landscape carefully to sustain its performance.

FAQs

1. What was YES Bank’s CASA growth in Q2 FY25?
   • YES Bank reported a 28.4% YoY rise in CASA deposits, totaling ₹88,559 crore for Q2 FY25.
2. What is the CASA ratio for YES Bank in Q2 FY25?
   • The bank’s CASA ratio improved to 32% in Q2 FY25 from 29.4% YoY and 30.8% in the previous quarter.
3. How did YES Bank’s total deposits perform in Q2 FY25?
   • YES Bank’s total deposits grew by 18.3% YoY, reaching ₹2.77 lakh crore by the end of September 2024.
4. How did YES Bank’s loans and advances grow in Q2 FY25?
   • The bank’s loans and advances increased by 13.1% YoY to ₹2.37 lakh crore in Q2 FY25.
5. What are YES Bank’s current asset quality ratios?
   • YES Bank’s gross NPA ratio stood at 1.7%, while its net NPA ratio improved to 0.5% as of June 30, 2024.

YES Bank Q2 FY25 Business Update

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