YES Bank Q2 results

YES Bank Shares Surge 10% on Strong Q2 Results: Key Financial Insights

YES Bank’s shares surged nearly 10% following its Q2 FY25 results, reflecting robust financial performance and strategic growth. Below are the primary details:

• Net Profit: YES Bank reported a 147% increase in net profit to ₹566.59 crore compared to ₹228.64 crore in Q2 FY24. This jump is largely attributed to reduced provisioning expenses.
• Net Interest Income (NII): The core NII grew by 14.3% to ₹2,200 crore, driven by a 12.4% growth in advances. The bank’s net interest margin (NIM) also improved slightly to 2.4%.
• Non-Interest Income: The bank’s non-interest income rose 16.3% to ₹1,407 crore.
• Deposits: The bank’s deposits grew by 18%, exceeding the industry trend of credit growth surpassing deposit growth.
• Advances and Deposit Growth Targets: YES Bank aims for 17-18% deposit growth and 13-14% growth in advances for FY25.
• Asset Quality: The bank witnessed ₹1,314 crore in fresh slippages, primarily from retail assets, of which ₹1,179 crore were from unsecured loans. However, the bank anticipates stabilization in unsecured loan slippages.

Advantages of YES Bank’s Q2 Performance

1. Significant Net Profit Increase: The bank’s net profit surged by 147%, reflecting strong profitability improvements.
2. Stable NIM Growth: With a slight increase to 2.4%, the bank is experiencing positive momentum in its NIM, an important profitability indicator.
3. Steady Deposit Growth: With an 18% increase in deposits, YES Bank outperformed the industry trend, reflecting customer confidence.
4. Controlled Asset Quality Issues: Although there were retail slippages, the bank expects these issues to stabilize, suggesting an effective risk management approach.
5. Strategic Focus on Reducing RIDF Balances: By gradually reducing its balances in the Rural Infrastructure Development Fund (RIDF), the bank aims to improve its profitability further.

Disadvantages of YES Bank’s Q2 Performance

1. Retail Slippages: The ₹1,314 crore in slippages, particularly from unsecured retail loans, highlights ongoing challenges in the retail sector.
2. Dependency on Non-Core Income: Non-interest income grew substantially, indicating that a notable portion of earnings is dependent on non-core operations, which may not be sustainable long-term.
3. Sectoral Risks in Retail Loans: The bank’s retail portfolio, especially unsecured loans, poses a higher risk, as unsecured loans are generally more vulnerable to defaults.
4. Potential Pressure on NIM Due to RIDF Balances: The 0.70% NIM drag caused by RIDF investments could limit growth, though the bank expects this to be a short-term issue.

Conclusion

YES Bank’s Q2 FY25 performance reflects a strong comeback, characterized by robust net profit growth, a solid increase in both net interest and non-interest incomes, and impressive deposit growth that surpasses the industry trend. The bank’s cautious approach to unsecured retail lending, alongside its strategic reduction of RIDF balances, shows a prudent focus on maintaining asset quality while aiming for sustainable growth. Despite challenges in the retail segment, particularly in unsecured lending, the bank’s management has provided a positive outlook, emphasizing strong collections and a potential stabilization in slippages. Overall, YES Bank’s Q2 performance indicates a well-rounded growth trajectory with a focus on prudent risk management and sustainable profitability.

FAQs

1. What contributed to the significant increase in YES Bank’s net profit?
   • The 147% increase in net profit was primarily driven by a reduction in provisioning expenses and strong performance across net interest and non-interest incomes.
2. How did YES Bank’s deposits grow compared to the industry?
   • YES Bank’s deposits grew by 18%, surpassing the general industry trend where credit growth has outpaced deposit growth.
3. What is YES Bank’s growth target for deposits and advances in FY25?
   • YES Bank targets 17-18% growth in deposits and 13-14% growth in advances for the fiscal year 2025.
4. What were the major concerns regarding asset quality in Q2?
   • YES Bank reported fresh slippages of ₹1,314 crore, mainly from retail assets, with 40% of these being unsecured loans, which poses a higher risk due to potential defaults.
5. What is YES Bank’s outlook on slippages in unsecured retail loans?
   • The bank anticipates that slippages in unsecured retail loans have reached a peak and will stabilize or decrease going forward.

YES Bank Q2 results

ICICI Bank Q2 FY25 Results: Surpassing Expectations with a 14.5% Profit Jump and Robust Loan Growth