Yes Bank Ltd (YESBANK) Q1 FY27 Earnings Call: Guides NIM Above 3% by FY28, Net Profit Jumps 33.7% YoY

Yes Bank Ltd held its Q1 FY27 earnings call on July 18, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Core Earnings Drive Profit Growth; Margins Expand

• Net profit of Rs.1,071 Cr — up 33.7% YoY in Q1 FY 2026-2027, despite a sharp drop in non-core SR portfolio gains to Rs.86 Cr (vs. Rs.338 Cr in Q1 FY 2025-2026) and lower treasury income.
• Operating profit rose 25.5% YoY — to Rs.1,704 Cr, with net interest income (NII) up 17.5% to Rs.2,786 Cr and core fees growing 18.7% YoY.
• Net interest margin (NIM) improved 20 bps YoY — to 2.7% in Q1 FY 2026-2027; management guided NIM to exceed 3% by FY 2027-2028 (FY28), supported by lower funding costs and higher-yield assets.
• Cost-to-income ratio improved to 62.8% — from 67.1% in Q1 FY 2025-2026, reflecting operating leverage.
• Asset quality strengthened — gross slippage at 1.4% of advances (vs. 2.4% a year ago); GNPA 1.3%, NNPA 0.2%; provision coverage at 81.7%.
• Moody's upgraded to BA1 — Care upgraded Basel III Tier 2 and infrastructure bonds to AA+; ICRA upgraded to AA; S&P Global assigned inaugural international rating of BB+ (external validation).

Advances Outpace Deposits on Period-End; Liability-Led Strategy Reaffirmed

• Advances grew 18.3% YoY — to Rs.2.85 lakh Cr in Q1 FY 2026-2027 (underlying average balance growth 15-16%); deposits grew 14.3% to Rs.3.15 lakh Cr; CASA grew 14.3%.
• Management guided loan book growth of 15-17% — for FY 2026-2027, modestly above industry levels, with a commitment to liabilities-led expansion.
• CD ratio unchanged on daily average basis — management acknowledged period-end advances growth outpaced deposits, but highlighted daily average balances showed no change from prior quarter; will not pursue aggressive asset growth without corresponding deposits.
• Retail disbursements growing 25-30% YoY — across segments in Q1 FY 2026-2027; book growth expected to reach mid-teens percentage by FY 2026-2027 as run-off from prior slowdown tapers.
• Retail secured-unsecured mix guardrail of 75% secured / 25% unsecured — personal loans are growing again after a 2-year slowdown; LAP remains a key focus product.
• Q1 commercial banking portfolio remains high quality — with limited impact from West Asia war; slippages controlled.

CET1 at 14%; Enabling Resolution for Rs.16,000 Cr Raise, No Imminent Need

• CET1 ratio of 14.0% — management believes this supports at least four quarters of growth (through FY 2026-2027); would consider raising capital only if CET1 drops to ~13% handle.
• Board approved enabling resolution for potential capital raise of Rs.16,000 Cr — implying ~10% equity dilution, refreshing a similar resolution approved by shareholders in FY 2025-2026; management noted current cushion is sufficient for ~3-4 quarters (through H1 FY 2027-2028).
• Core equity accretion from RoE of 8-8.5% — plus DTA benefits, allows risk-weighted asset growth of 12-13% without capital consumption; management assured any raise would only be executed if it benefits growth and creates shareholder value.
• Transition to ECL not expected to materially impact core equity — partly offset by security receipts and the new credit-risk-weight circular effective April 2026 (FY 2026-2027).
• Enabling approval is routine and not linked to the pending "81 case" — no provisions have been booked for that case.

FCNR Leverage at 9x; NIM Guided to 3%+ by FY28; SMBC Partnership Leveraged

• FCNR deposits seeing strong demand — both pure deposits and leveraged inflows; leverage being kept at 9x for now, with potential to increase if market conditions allow.
• Management working with multiple international banks (including SMBC) — to secure limits for FCNR leverage; adoption slower than expected due to higher global borrowing spreads and time required for risk reviews by overseas institutions, impacted by geopolitical factors.
• Cost of deposits has declined substantially since April FY 2025-2026 — without causing deposit attrition, improving pricing power; management claimed best cost of deposits outcome relative to industry over last three fiscal years through Q1 FY 2026-2027.
• NIM guided to exceed 3% by FY 2027-2028 — supported by lower funding costs and focus on higher-yield assets; medium-term aspiration to move NIM to 3%+ over next two years (by ~FY 2028-2029).
• Indo-Japanese business corridor cited as growth driver — management cited "growing Indo-Japanese business corridor after recent inter-government meetings" and aims to leverage SMBC partnership to capture trade and investment flows; strong interest from East Asia.
• Interest on IT refund of Rs.119 Cr is part of non-interest income — not net interest income; NIM remained stable QoQ with no adjustment.

SR Gains Normalising; FY27 ROA Aspiration of ~1%

• SR recoveries of Rs.86 Cr in Q1 FY 2026-2027 — down from Rs.446 Cr in previous quarter, due to unpredictable resolution timing by JC Flowers; outstanding SR face value is Rs.1,500 Cr with NAVs exceeding Rs.2,000 Cr.
• Full-year FY 2026-2027 SR recovery guidance of Rs.800-1,000 Cr — compared with Rs.1,500 Cr in FY 2025-2026; execution remains subject to JC Flowers' actions.
• Core ROA expected to expand by 15-20 bps in FY 2026-2027 — management aspires to deliver full-year reported ROA around 1% for FY 2026-2027, contingent on bond gains and trading income contributing alongside core earnings.
• Management expressed confidence in a "very pleasant picture" by end-FY 2026-2027 — citing positive momentum over recent quarters; reiterated no immediate fundraising need.
• Shareholder suggested extending IPO payment cutoff times to boost CASA — management acknowledged the suggestion and committed to working on it but did not provide a specific timeline.