YES Bank Eyes 1% ROA Amid Recovery

YES Bank anticipates concluding the current financial year with a 1% return on assets (ROA), a key profitability metric. The bank projects that its annual ROA will surpass 1% in the upcoming fiscal year. This outlook follows a substantial increase in net profit for the December quarter, which grew by 55% year-on-year and 45% quarter-on-quarter, reaching Rs 952 crore.

The bank's reported annualized ROA for the December quarter improved to 0.9%, up from 0.6% in the previous quarter and the same period last year. For the first nine months of the financial year, the annualized ROA rose to 0.8% compared to 0.5% in the prior year. These improvements reflect strategic initiatives aimed at better asset utilization and profitability.

Following Sumitomo Mitsui Banking Corporation (SMBC) of Japan's acquisition of a 24.9% stake for approximately Rs 16,000 crore, the bank is focusing on balancing accelerated growth with enhanced profitability. A critical factor in this strategy is resolving legacy priority sector lending (PSL) shortfalls, with the bank achieving 100% compliance since FY24.

YES Bank is systematically reducing its Rural Infrastructure Development Fund (RIDF) balances, which have decreased from a peak of 11% to 6.9% in Q3, and is on track to lower them below 5% of total assets by FY27. As these low-yielding assets mature, the bank plans to retire higher-cost borrowings and reinvest funds into more profitable advances.