Mumbai, October 19 — Yes Bank Ltd reported a sharp rebound in quarterly earnings, with consolidated net profit jumping 63.2 per cent year-on-year to Rs 1,084.08 crore in the September quarter, aided by strong net interest income growth and a steep fall in provisions. The Yes Bank Q2 results also showed standalone net profit surging 65 per cent to Rs 1,080 crore from Rs 654 crore a year earlier.
The Yes Bank Q2 numbers showed net interest income (NII) — the difference between interest earned on loans and other assets and interest paid on deposits and borrowings — rising 22.7 per cent to Rs 2,822 crore from Rs 2,301 crore a year earlier. Operating profit climbed 29.4 per cent to Rs 1,678 crore from Rs 1,297 crore, while provisions and contingencies dropped 24.3 per cent to Rs 317 crore from Rs 419 crore.
Yes Bank Q2 Net Profit Rises on Lower Provisions, Strong NII
Asset quality in the Yes Bank Q2 print improved during the quarter. Gross non-performing assets declined to 1.2 per cent of total advances from 1.6 per cent in the year-ago period, while net NPAs fell to 0.2 per cent from 0.3 per cent. In absolute terms, gross NPAs stood at Rs 3,875 crore against Rs 4,055 crore a year ago.
The Yes Bank Q2 balance sheet continued to expand. Advances increased 23.7 per cent year-on-year to Rs 3.10 lakh crore as of September 30, while deposits grew 19.5 per cent to Rs 3.54 lakh crore. Non-interest income rose 14.4 per cent to Rs 1,882 crore from Rs 1,644 crore. Net interest margin improved to 2.6 per cent from 2.5 per cent a year ago, though it slipped from 2.7 per cent in the June quarter.
Segmental results in the Yes Bank Q2 disclosure were mixed. Treasury operations profit before tax rose to Rs 715 crore from Rs 380 crore a year earlier, while corporate banking profit before tax declined to Rs 573 crore from Rs 790 crore. Retail banking narrowed its pre-tax loss to Rs 14.6 crore from Rs 358.1 crore, and other banking operations reported profit before tax of Rs 189 crore, broadly unchanged from Rs 192 crore.
Yes Bank Q2 Earnings Overshadowed by AT-1 Bond Ruling
The strong Yes Bank Q2 operating print comes with a significant qualification. The bank has not incorporated the potential financial impact of the Supreme Court’s ruling on its Rs 8,415 crore Additional Tier-1 (AT-1) bond write-off undertaken in March 2020 during the bank’s reconstruction. The bank’s own pro forma calculations indicate that recognising the impact would have turned the quarter’s reported profit into a net loss of Rs 5,217 crore.
The dispute dates back to March 2020, when the RBI superseded the bank’s board amid rising bad loans and weakening depositor confidence, and the administrator wrote down AT-1 bonds worth Rs 8,415 crore to zero as part of an SBI-led rescue. The Supreme Court’s recent ruling offers relief to institutional and retail investors whose holdings were written down. Yes Bank said it is evaluating the judgment’s consequential implications and, in consultation with legal advisers, all legal remedies available to it.
Shares of Yes Bank ended in deep red on Friday even as the broader banking index advanced, with investors weighing the improving core performance against the unresolved capital question. The Yes Bank Q2 earnings were announced on Saturday, October 17, alongside a clutch of other lenders’ results. ICICI Bank’s consolidated profit rose 22.28 per cent to Rs 16,333.18 crore, Axis Bank’s climbed 39.4 per cent to Rs 7,704.67 crore, and HDFC Bank’s consolidated profit grew 5.55 per cent to Rs 20,700 crore, while IDBI Bank’s profit fell 39 per cent on lower non-interest income. The bank said it will continue to evaluate the Supreme Court judgment’s accounting and capital implications in the coming quarters.
For now, analysts say the Yes Bank Q2 numbers confirm the lender’s operating turnaround — stronger margins, lower provisions and cleaner asset quality — but the AT-1 overhang will keep the stock’s trajectory hostage to legal developments in the coming quarters.