YES Bank Achieves 1% ROA Milestone on Strong FY26 Results

YES Bank announced a full-year FY26 net profit of ₹3,476 crore, a significant 44.5% increase from the previous year. The bank also successfully met its target of a 1% Return on Assets (ROA) for the fourth quarter of FY26, with its full-year ROA reaching 0.8%.

Net Interest Margins (NIMs) improved by 20 basis points year-on-year to 2.6% for FY26, and stood at 2.7% in Q4 FY26. The bank also reduced mandated RIDF deposits to 6% of assets from 9% last year, indicating a healthier funding mix and better cost management.

Asset quality continued to strengthen, with Gross Non-Performing Assets (GNPA) falling to 1.3% and Net Non-Performing Assets (NNPA) to 0.2%. The Provision Coverage Ratio (PCR) remained robust at 81.9%.

Total advances grew 11.1% year-on-year to ₹2.73 lakh crore, while total deposits rose 12.1% to ₹3.18 lakh crore. The CASA ratio closed FY26 at 35.1%.

Why These Results Matter for YES Bank

Achieving the 1% ROA milestone is a key indicator of YES Bank's progress in generating sustainable profitability after its restructuring. Improved NIMs and strong deposit growth reflect a healthier balance sheet and more efficient management of funding costs.

The stable asset quality, with GNPA well below 2%, suggests that the bank's risk management is maturing and its strategy of focusing on granular retail and MSME lending is proving effective.

YES Bank's Turnaround Journey

YES Bank has been engaged in a significant turnaround since its near-collapse several years ago. This effort involved substantial capital infusions, a change in management, and a strategic shift towards strengthening its retail deposit base and improving loan book quality. The bank has worked to reduce legacy non-performing assets and build a more resilient business model.

What Investors Should Monitor

Shareholders can anticipate a continued focus on profitability, with management targeting further ROA improvements in FY27. The bank's guidance for 13-15% loan growth aligns with industry averages, signalling a return to normalized expansion. A further reduction in mandated RIDF deposits is expected to improve the funding mix with more cost-effective sources.

Continued low GNPA levels suggest sustained risk management effectiveness. Investors will also track slippages in personal loans and credit cards, which were ₹160 crore and ₹135-140 crore respectively in Q4 FY26. The bank plans to add approximately 80 branches annually.

Key Risks and Uncertainties

The primary legal risk remains the Supreme Court's decision on the writedown of AT1 bonds. An adverse ruling could lead to significant, though currently unquantified, financial implications. Macroeconomic volatility, including geopolitical conflicts and price fluctuations, also poses potential inflationary pressures that could impact margins and asset quality.

Management is closely monitoring the MSME segment for any impact from geopolitical events, although no stress is currently visible. Geopolitical factors like West Asia conflicts are also being watched for their effect on the MSME segment.

Peer Performance Comparison

YES Bank's FY26 ROA of 0.8% (full year) and 1% (Q4) is lower than major private banking peers for FY24/FY25, who reported ROAs between 1.9% and 2.6%. Similarly, YES Bank's FY26 NIM of 2.6% is below the typical 4.1% to 5.2% range of its peers, though the bank targets structural improvement. Asset quality (GNPA 1.3%) is improving and comparable to some peers like Kotak Mahindra Bank (1.42% in Q4FY25) and Axis Bank (1.28% in Q4FY25), but higher than HDFC Bank (1.15% in Q4FY26) and ICICI Bank (1.53% in Q3FY26).