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Informist, Saturday, Jul. 19, 2025

By Akash Mandal and Pratiksha

MUMBAI – YES Bank Ltd.'s net interest margin and loan yields are likely to be under pressure in the near term and the bank is looking to minimise this impact, its management said in a post-earnings analyst conference call Saturday. The maximum impact of the Reserve Bank of India's 75-basis-point cumulative rate cut so far in 2025-26 (Apr-Mar) will be seen in the September quarter, the management said. However, the impact would reduce in the December quarter, and the bank looks to exit the current financial year on a strong note, it added.

"...the peak of that pressure we would see in the immediate future, which is September, because as you also rightly said with the way the portfolio gets repriced, the maximum impact of this 50 basis points and a part of the 25 basis points from the previous cut will actually be in the quarter of September. And then December, the impact will be lower," the management said. 

"...you could say that September might face headwinds, which we believe December should start looking closer to where we are today...and as we look at March, we should possibly see improvements as a combination of all the actions that we are talking about. But I don't want to end up in a specific number," it added. 

The bank said growth in corporate deposits and benefits from the central bank's cash reserve ratio cut will help mitigate the near-term impact on margins. The bank had also cut its savings account rate in April, which further helped protect margins. 

The bank also said while the June quarter has been historically weaker for banks, it is confident of its loan book growing at the guided pace of 12-15% going ahead. While credit growth remains important, the bank said it has been focussing on growing in a profitable manner. The bank said it has sufficient capital and can raise deposits when needed. Thus, these factors are unlikely to act as barriers for the bank's credit growth, it said. 

The bank said its rural infrastructure development fund loan book will continue to decline going ahead. By FY27, the bank sees the rural infrastructure development fund segment contributing less than 5% of its advances. The bank said the RBI is likely to approve Sumitomo Mitsui Banking Corp.'s proposal to buy stake in the bank by September-end. However, asked about media reports of Sumitomo Mitsui being interested in acquiring an additional stake, the management refused to comment.

The bank said it is targeting a return on assets of 1% by end of FY26 and maintaining that on an average in FY27. For the June quarter, the bank's return on assets was at 0.8%. 

For the June quarter, the private sector bank reported a bottom line of INR 8.01 billion, up nearly 60% on year and higher than analysts' estimates of INR 6.20 billion. Its top line rose 5% on year to INR 93.48 billion. On Friday, shares of the bank closed 0.2% higher at INR 20.17 on the National Stock Exchange.   End

Edited by Tanima Banerjee

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