Summary
YES Bank Limited - Q3 FY2026 Earnings Call Summary Saturday, January 17, 2026 4:00 PM
Event Participants
Executives 5 Manish Jain (ED), Niranjan Banodkar (CFO), Prashant Kumar (MD & CEO), Dr. Rajan Pental (ED), Sunil Parnami (Head Investor Relations)
Analysts 6 Anurag Khurana (Individual), Dev Dey (Horse Power Securities), Jai Mundhra (ICICI Securities), Jayant Kharote (Axis Capital), Nagesh Motamarri (Individual), Pankaj Agrawal (Prudence Investment Advisors)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Deposits | ₹2.93 lakh crores | +5.5% YoY; Outperformed industry in Retail CASA growth despite sharp rate cuts. |
| Total Advances | ₹2.57 lakh crores | +5.2% YoY, +2.9% QoQ; Growth calibrated by selectivity in low-yield Retail and Corporate segments. |
| Net Profit (PAT) | ₹952 crores | +55% YoY, +45% QoQ; Adjusted for ₹155cr gratuity charge, PAT was ₹1,068 crores. |
| Return on Assets (RoA) | 0.9% (Annualized) | +30 bps YoY; Adjusted for one-time gratuity impact, RoA reached the 1.0% milestone. |
| Net Interest Margin (NIM) | 2.6% | +24 bps YoY, +12 bps QoQ; Driven by RIDF rundown and lower cost of funds. |
| Cost-to-Income Ratio | 66.1% | Adjusted for gratuity; improved from 71.1% YoY due to strict cost optimization. |
| Gross NPA | 1.5% | Improved from 1.6% QoQ; reflects 8-quarter low in slippages and better collections. |
| Net NPA | 0.3% | Remained stable QoQ; Provision Coverage Ratio (PCR) at 83.3%. |
| Cost of Deposits | 5.6% | Reduced from 6.1% YoY; attributed to proactive rate cuts and retail-led mobilization. |
| Capital Adequacy (CRAR) | Not explicitly cited* | Management noted increasing contribution of capital in funding mix via profitability. |
*Note: Transcript mentions capital contribution improvement but lacks specific CRAR % for the quarter.
Geographic & Segment Commentary
- SME & Mid-Corporate: This remains the primary growth engine for the bank. SME advances now constitute 29.3% of the total loan book, representing one of the highest proportions in the industry with robust disbursement traction.
- Retail Assets: Strategically chose to deprioritize Home Loans, New Car Loans, and Gold Loans due to unattractive risk-adjusted returns. Excluding these, the segment saw strengthening momentum with Personal and Business Loan disbursements growing >20% YoY.
- Corporate & Institutional (CIB): Growth is selective due to cost-of-funds disadvantages vs. PSU peers. Focus remains on non-fund-based income via API banking, transaction banking, and financial markets advisory.
Company-Specific & Strategic Commentary
- RIDF Rundown: Legacy Priority Sector Lending (PSL) shortfall balances reduced to 6.9% of assets from 11% in FY24. Management targets <5% by FY27, which will significantly unlock margins.
- Branch-Led Strategy: Network expanded to 1,328 branches (33 added in Q3). Internal sourcing via branches now accounts for 52% of Retail disbursements, up from 37% two years ago.
- SR Portfolio Resolution: Recovered ₹555 crores from Security Receipts (SR) this quarter. The outstanding SR book is now reduced to ₹1,800 crores from an original ₹6,800 crores, with total cash recoveries of ₹7,500 crores to date.
- Digital Differentiation: Leveraging API and Transaction Banking to acquire high-velocity flows. Management plans to expand into Wealth Management and potentially re-enter Gold Loans as capabilities mature.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Return on Assets (RoA) | 1.0% by Q4FY26; 1.5% Mid-term | Driven by margin expansion (RIDF exit), fee income growth, and credit cost normalization. |
| Loan Growth | ~8% for FY26; Market-line in FY27 | Near-term growth is calibrated for profitability; will align with system growth as legacy drags exit. |
| RIDF Balances | <5% of Total Assets by FY27 | Systematic retirement of high-cost borrowings as low-yielding RIDF assets mature. |
| Credit Cost | <50 bps (Net) for FY26 | Management confident in maintaining low credit costs despite SR recovery volatility. |
Risks & Constraints
| Risk | Context |
|---|---|
| Interest Rate Sensitivity | Recent rate cuts by RBI and competitive intensity put pressure on NIMs. Management is mitigating this through faster deposit rate repricing than peers. |
| Growth-Profitability Trade-off | Calibrating the loan book to avoid low-yield prime segments (Home/Auto) results in headline growth lagging the banking system. |
| Regulatory Uncertainty | Potential impact of new Labor Codes on wage definitions led to a ₹155cr one-time gratuity provision to prevent future earnings volatility. |
Q&A Highlights
Asset Quality & Retail Turnaround
- Question: When will the Retail Banking segment become profitable? (Pankaj Agrawal)
- Answer: Retail has broken even this quarter on an adjusted basis. Investments in underwriting and collections over the last 4-5 years are now yielding results through lower slippages and better recoveries (Prashant Kumar).
Slippage Trends
- Question: Can you provide details on PL and Credit Card slippages? (Jai Mundhra)
- Answer: PL slippages fell to ₹180cr (from ₹250cr YoY) and Credit Cards to ₹140cr (from ~₹200cr YoY). “Entry rates” into delinquency for Cards dropped from 20% to 12% (Niranjan Banodkar & Rajan Pental).
CASA Growth
- Question: Why are absolute CASA balances not growing meaningfully? (Jayant Kharote)
- Answer: Average CASA growth is healthy at 5% QoQ. While reported numbers have some “noise” from transient September flows, average Savings Account balances are up 17% YoY despite a 150 bps cut in SA rates (Niranjan Banodkar).
Legacy Recoveries
- Question: What is the remaining juice in the JC Flowers ARC book? (Pankaj Agrawal)
- Answer: Original book was ₹48,000cr; cash recoveries of ₹7,500cr achieved. Remaining SR book of ₹1,800cr still holds resolution upside. FY26 recovery target is ₹1,200cr (Prashant Kumar).
Key Takeaway
YES Bank reported a “breakout” quarter characterized by sharp RoA expansion to 0.9% (1.0% as-adjusted) and a substantial 55% YoY growth in Net Profit. The bank’s strategy of prioritizing profitable growth over headline volume is evident in its 2.6% NIM expansion, fueled by the structural rundown of low-yielding RIDF assets (now 6.9%) and aggressive deposit repricing. While credit growth of 5.2% YoY lags the system, the focus on the high-margin SME segment (29% of book) and a turnaround in Retail asset quality—marked by an 8-quarter low in slippages—suggests a more resilient balance sheet. Management remains committed to a 1.0% RoA exit for FY26 and market-aligned growth in FY27 as legacy drags subside. The bank continues to navigate a high-competition environment by leveraging its 1,328-branch network to drive 52% of its retail originations internally.
Want more insights like this?
Subscribe to get deep dives delivered to your inbox.
More Earnings Summaries
Explore more Q3 FY26 earnings call analyses: