YES Bank Q3 FY26 Earnings Call Transcript: Profit Jumps 55%, ROA Nears 1%

MUMBAI: In what marks a significant turnaround, private lender YES Bank on Saturday reported a 55% year-on-year jump in net profit to ₹952 crore for the quarter ended December 2025, driven by improved margins, better asset quality and a breakthrough in its retail business that has finally turned profitable.

The Numbers Speak

The bank's performance exceeded street expectations on multiple parameters. Adjusted for a one-time gratuity provision of ₹155 crore (due to new labour codes), the actual net profit stood at ₹1,068 crore. The return on assets (ROA) improved to 0.9% from 0.6% in the previous quarter, inching closer to the management's target of 1% by March 2026.

"Quarter 3 was a breakout quarter with all-around strong core operating performance across profitability, asset quality and granularity," said MD & CEO Prashant Kumar during the earnings call.

The Retail Breakthrough

After years of heavy investment and weathering a tough credit cycle, YES Bank's retail segment has finally hit breakeven. "This quarter, our retail businesses have breakeven, and going forward, we would see significant contribution to profitability from retail," Kumar revealed.

The retail turnaround comes on the back of:

15% year-on-year growth in retail asset disbursements
Personal loans and business loans showing over 20% growth
Credit card outstanding growing 21% YoY
Rural banking portfolio up 17%

Strategic Selectivity Pays Off

In a market chasing growth at any cost, YES Bank's calibrated approach appears to be working. The bank has consciously avoided three major retail segments - home loans, new car loans and gold loans - where risk-adjusted returns were unattractive.

"We are not there in Prime Home Loan and New Car Loan and Gold Loan... we continue to remain selective," Kumar stated, emphasizing the bank's focus on profitability over pure growth.

Deposit Dynamics

Despite taking some of the most aggressive deposit rate cuts in the industry, YES Bank managed 5.5% deposit growth with improved granularity. Retail deposits now contribute 60% of total deposits, with retail current accounts growing 19.4% and savings accounts up 16.3%.

"The outperformance in deposits in a tight liquidity environment is a testament to our branch-led deposit engine," Kumar said.

The Road Ahead

The bank remains confident about achieving its guidance:

1% ROA by FY27, moving to 1.5% in medium term
Credit growth in line or marginally above industry
RIDF balances to fall below 5% of total assets by FY27 (from 6.9% currently)
Continued recovery from security receipts portfolio

What Analysts Are Watching

During the Q&A session, analysts focused on:

Growth trajectory - Management expects sequential growth above 3% in Q4
SMBC relationship - The Japanese bank's 24.9% stake and potential subsidiary plans
Dividend prospects - No immediate timeline but "at the right time"

Market Reaction

YES Bank shares have shown resilience in recent months, reflecting the steady operational improvements. With the retail segment now contributing positively and asset quality metrics improving, analysts expect the re-rating story to continue.

The bottomline: YES Bank's quarter demonstrates that sometimes, slow and steady does win the race. By prioritizing profitability over reckless growth, the bank seems to have found its formula for sustainable recovery.