Profit Surge Unleashed: Is Yes Bank’s 1% ROA Target Closer Than You Think?

Image Source: BFSI News

Yes Bank will reach a 1% Return on Assets (ROA) in the next two financial years with a dramatic reduction in credit costs, solid asset quality, and a turnaround strategy towards profit-generating lending, said CEO Prashant Kumar.

Main Points:

Yes Bank's Q4 FY25 net profit jumped 63% year-on-year to ₹738 crore, driven by reduced provisions and better asset quality. The gross NPA ratio came down to 1.6% and net NPA fell to 0.3%, the lowest since March 2020.
Credit costs have come down sharply, with provision costs reducing by 42% year-on-year, freeing up capital for growth and profitability.
The cost-to-income ratio of the bank also improved significantly, falling from 76% to 67% in the last year, with a view to achieving the low 60s in the next quarters.
Selective, high-yield retail and SME lending is the focus area for Yes Bank, coupled with robust risk controls and collections. Retail loan growth is likely to recover to 10-12% in FY26, contributing to an overall loan growth target of 12-15%.
Deposit rates are steady at 6-6.1%, and liquidity coverage ratio is strong at 125%. Recent reductions in savings rates are likely to further enhance margins.

CEO Prashant Kumar reaffirmed the bank's optimism of achieving a 1% ROA by FY27, with the potential to achieve this target as early as Q4 FY26, due to continued margin expansion and prudent cost control.

Sources: Economic Times, Business Today, Moneycontrol