Deposit Growth and Liability Strength

Yes Bank's fourth quarter of fiscal year 2026 showed clear success in growing its deposit base. Total deposits rose a significant 12.1% year-on-year to Rs 3.18 lakh crore, up from Rs 2.84 lakh crore the previous year. This momentum continued sequentially with a 9% increase. Critically, Current Account Savings Account (CASA) deposits, a key source of low-cost funding, surged 14.9% year-on-year to Rs 1.11 lakh crore. This growth pushed the CASA ratio, including certificates of deposit, to 35.1%, up from 34.0% last quarter and 34.3% a year ago. This stronger liability structure is vital for the bank's long-term stability and profitability, offering a cushion against rising interest rates and competition for funds in India.

Loan Growth and Balance Sheet Metrics

Advances also expanded by a healthy 10.7% year-on-year to Rs 2.72 lakh crore, compared to Rs 2.46 lakh crore previously. Sequentially, advances grew 5.8%. The credit-to-deposit ratio eased to 85.4% from 88.0% in the prior quarter and 86.5% a year earlier. This suggests more balanced growth, with deposits growing faster than credit, which typically enhances financial stability and reduces reliance on costly wholesale funding. However, the bank's liquidity coverage ratio (LCR) decreased to 119% from 123.8% in the December quarter and 125% a year before. While this remains comfortably above the regulatory minimum of 100%, it marks a step down from previous levels and is lower than many peers.

Market and Competitor Landscape

Yes Bank's 12.1% year-on-year deposit growth rate was robust. This contrasts with IndusInd Bank's 2.6% YoY deposit decline in Q4 FY26, though IndusInd also saw sequential QoQ growth. HDFC Bank, however, reported stronger year-on-year deposit growth, with deposits up 14.4%. Across the Indian banking sector, strong credit growth (around 13.8% YoY as of mid-March 2026) is often outpacing deposit expansion, leading to higher credit-to-deposit ratios for many banks. This intense competition for deposits is a major factor influencing funding costs. Historically, Yes Bank's stock has responded well to signs of balance sheet strengthening, but past volatility makes investors cautious about its valuation, with its current P/E ratio around 17.8x, which is higher than the industry average of 12.28x.

Challenges and Investor Concerns

Despite positive deposit trends, the slight decline in the liquidity coverage ratio (LCR) to 119% requires close attention. This figure is lower than last year's 125% and trails competitors like Kotak Mahindra Bank, which consistently reports LCRs above 130%. This could suggest a tighter liquidity position or increased reliance on less stable funding, especially if deposit growth slows. Furthermore, Yes Bank has a history of aggressive lending, under-reporting of non-performing assets (NPAs), and a significant liquidity crisis in 2020. While asset quality has stabilized recently, the market remains sensitive to any signs of deterioration. Current analyst sentiment reflects this caution, with a consensus 'Sell' rating and price targets indicating limited upside from its current trading price of ₹17.87.

Future Outlook and Analyst Views

Analysts are optimistic about Yes Bank's future earnings per share (EPS) growth, projecting significant increases in the coming years. Management's priority is expected to remain on sustaining deposit growth and managing credit expansion prudently. The bank's ability to translate its stronger liability structure into consistent profitability and maintain healthy liquidity levels will be crucial for its performance in the upcoming fiscal year. Analyst price targets show mixed views, with some seeing potential upside while others maintain 'Sell' recommendations.