YES Bank reported a 23.8% year-on-year increase in loans to ₹3.09 lakh crore for the September quarter. While headline growth remains strong, the decline in the CASA ratio to 30% from 32.7% signals a shift toward higher-cost funding. Investors are now focusing on whether this funding mix impacts the bank's future profit margins.
YES Bank has released its provisional business updates for the quarter ending September 30, 2026, showing a mix of robust headline growth and evolving funding dynamics. The lender reported gross loans and advances of ₹3,09,675 crore, marking a 23.8% increase compared to the same period last year. Simultaneously, total deposits grew by 19.5% year-on-year to reach ₹3,54,084 crore.
Headline Growth vs. Normalized Reality
While the headline figures suggest rapid expansion, the management has provided normalized growth figures to offer a clearer view of core operational momentum. When the data is adjusted to exclude volatile foreign currency non-resident (FCNR) deposits and related term loans, the quarterly growth in advances was 3.3%, while deposit growth stood at 6.5%. This distinction is important for investors as it separates the influence of specific foreign currency instruments from the bank’s underlying retail and corporate lending activities. The bank continues to navigate a competitive environment in the private banking sector where institutions are actively vying for market share.
Funding Mix and Margin Pressure
A key area for investors to monitor is the bank’s Current Account and Savings Account (CASA) ratio, which contracted to 30.0% as of September 30, compared to 32.7% in the previous quarter. The CASA ratio represents low-cost funds, and a decline in this metric often forces banks to rely on more expensive sources of funding, such as term deposits or wholesale borrowings. This shift can put pressure on net interest margins, which measure the difference between the interest a bank earns on loans and the interest it pays to depositors.
Despite the pressure on funding costs, the bank’s liquidity position remains stable. The credit-to-deposit ratio improved to 87.5% from 90.4% in the June quarter, indicating a more balanced approach to liquidity management. Furthermore, the average quarterly liquidity coverage ratio was reported at 131.4%, which suggests that the bank maintains adequate capital buffers to handle short-term cash flow requirements and potential market volatility.
The bank is currently working on stabilizing its CASA profile while integrating liquidity support from recent facilities provided by the Reserve Bank of India. The primary monitorable for the coming quarters will be the bank's ability to attract low-cost retail deposits to offset the reliance on more expensive funding. Investors will likely look for updates in the upcoming detailed financial results regarding the sustainability of interest margins and any progress on retail deposit mobilization strategies.