YES Bank has reported a remarkable performance for the fourth quarter of FY25, with a net profit surge of 63.3% year-on-year, reaching ₹738.1 crore. This significant growth comes as a positive surprise for investors and analysts alike, especially considering the bank's improving asset quality metrics.
The Mumbai-based lender's net interest income (NII) also showed a healthy increase of 5.7%, amounting to ₹2,276.3 crore compared to ₹2,153 crore in the same quarter of the previous fiscal year. This growth in NII is attributed to the difference between the interest earned on loans and the interest paid to depositors, which is critical for banks.
According to a CNBC-TV18 poll, analysts had predicted a net interest income of ₹2,182.1 crore for the quarter, making the actual results even more impressive. The bank's gross non-performing assets (GNPA) remained stable at 1.6%, unchanged from the previous quarter, while net non-performing assets (NPA) improved from 0.5% to 0.3% quarter-on-quarter.
In monetary terms, the gross NPA stood at ₹3,935.6 crore, a slight decrease from ₹3,963.47 crore in the previous quarter. On the other hand, the net NPA decreased to ₹800.1 crore from ₹1,142.62 crore, reflecting the bank's effective management of bad loans. Provisions for bad loans were reported at ₹318.1 crore, down from ₹470.9 crore year-on-year but higher than the ₹258.7 crore in the previous quarter.
YES Bank's net interest margin (NIM) for Q4 FY25 was reported at 2.5%, compared to 2.4% in the same quarter last year. This improvement in NIM is a positive indicator of the bank's profitability and efficiency in managing its interest-earning assets.
During the quarter, the bank's total income rose by 3.76% year-on-year to ₹9,355.39 crore, while profit before tax climbed an impressive 130.83% to ₹996.31 crore. Operating profit was also strong, reaching ₹1,314 crore, marking a 45.67% increase from ₹902 crore in the same period last year.
Furthermore, YES Bank's total deposits grew by 6.81% year-on-year to ₹2,84,525 crore, while total advances increased by 8.07% year-on-year to ₹2,46,188 crore. The bank's CASA (Current Account Savings Account) ratio improved to 34.3%, up from 30.9% in the corresponding quarter of the previous year, indicating a stronger base for low-cost deposits.
In terms of new business, YES Bank opened approximately 2.58 lakh new retail CASA accounts during the quarter, contributing to a total of about 13.15 lakh for FY25. This growth in retail and small business deposits, which increased by 8.3% year-on-year, positions the bank favorably in a competitive landscape.
Despite the positive results, analysts remain cautious. A significant number of them maintain a 'sell' rating on the stock, citing potential risks from market volatility and economic shifts. Ten out of the twelve analysts covering YES Bank have a 'sell' rating, while the remaining two have a 'hold' recommendation. The price targets for the stock range between ₹15 to ₹17.
On April 21, following the announcement of its quarterly results, YES Bank's shares jumped by 6% to ₹19.23. The stock has shown an upward trend, gaining 11% over the past week. Analysts from Arihant Capital Markets noted that this surge in share price is primarily supported by lower operating expenses and reduced credit costs.
Additionally, the bank's net advances rose to ₹2,46,188 crore, indicating a healthy growth trajectory. Fresh disbursements in Q4 FY25 were reported at ₹27,734 crore, while total disbursements for FY25 reached ₹97,899 crore. This demonstrates YES Bank's commitment to expanding its lending portfolio.
In a regulatory filing, YES Bank stated that it allotted over 3.25 million equity shares during the quarter, reflecting its ongoing efforts to engage employees through approved stock option schemes. The management remains optimistic about the bank's future, with plans to continue expanding its branch network and improving customer services.
Prashant Kumar, the bank's Managing Director and Chief Executive Officer, expressed confidence in YES Bank's strategic direction, stating, "The Q4 FY25 marked yet another important quarter for YES BANK as it continued to make steady improvements across several key metrics and progressed well on the strategic objective of improving its profitability."
Overall, YES Bank's latest quarterly results signal a positive turnaround for the lender, showcasing its ability to navigate challenges and enhance its financial performance. As the bank continues to focus on improving asset quality and expanding its customer base, investors will be watching closely to see how these developments unfold in the coming quarters.
