Yes Bank shares recovered sharply from intraday lows after the private lender released its Q1FY26 business update, which highlighted robust growth in deposits and advances, alleviating market concerns over its credit growth trajectory and asset quality trends.
Market Reaction
Yes Bank opened weak on Thursday, falling nearly 3.8% to an intraday low of ₹17.85 per share in early trade amid broader market volatility. However, post the release of its quarterly business update during market hours, the stock witnessed strong buying interest, rebounding to close at ₹18.55, up 1.4% from previous close, indicating positive investor sentiment.
Highlights Of Yes Bank’s Q1FY26 Business Update
| Key Metric | Q1FY26 | Q1FY25 (YoY) | Q4FY25 (QoQ) | Growth (%) |
|---|---|---|---|---|
| Gross Advances | ₹230,110 crore | ₹210,000 crore | ₹223,900 crore | +9.6% YoY; +2.8% QoQ |
| Deposits | ₹243,750 crore | ₹220,500 crore | ₹237,000 crore | +10.5% YoY; +2.8% QoQ |
| CASA Deposits | ₹94,250 crore | ₹85,700 crore | ₹92,000 crore | +10% YoY; +2.4% QoQ |
| CASA Ratio | 38.7% | 38.9% | 38.8% | Marginally stable |
| Retail Advances Share | 62% | 59% | 61% | Positive traction |
Key Takeaways From The Update:
- Steady loan growth: Gross advances rose nearly 10% YoY, indicating revived corporate and retail credit demand amid economic recovery.
- Healthy deposit accretion: Deposits crossed ₹243,000 crore, supporting comfortable liquidity coverage ratios.
- Stable CASA Ratio: The CASA (Current Account Savings Account) ratio remained stable at ~39%, crucial for lowering cost of funds.
- Retail lending focus: Retail advances continue to dominate the loan book, reflecting de-risking efforts and improving yield spreads.
Analyst Commentary
Market analysts and brokerages offered mixed to positive views post the update:
- HDFC Securities:
“Yes Bank’s business update is broadly in line with expectations. Sustained growth in deposits and retail loans will support NIM expansion, but clarity on asset quality and provisioning remains key before re-rating.” - Motilal Oswal:
“The gradual growth momentum is encouraging. However, the stock remains range-bound given limited earnings visibility and legacy NPA resolution challenges.” - Kotak Institutional Equities:
“Improved balance sheet metrics are positive, but capital infusion or strategic investor news will act as a bigger trigger for significant upward re-rating.”
Recent Strategic Developments
- NPA Resolution Progress: Yes Bank has been expediting recoveries from its legacy stressed asset pool. Recent recoveries include ₹800 crore from its large steel sector exposure.
- Digital Banking Push: The bank has launched enhanced mobile banking platforms and digital SME lending modules to drive low-cost CASA and fee-based income.
- Strategic Stake Sale Talks: Market speculation continues around potential strategic stake sales to strengthen capital base, though management has not confirmed any timeline.
- Corporate Lending Revival: Select mid-corporate and infrastructure lending is being pursued cautiously with tightened underwriting norms.
Comparative Sector Performance
| Bank | Gross Advances Growth (YoY) | Deposits Growth (YoY) | Latest CASA Ratio |
|---|---|---|---|
| Yes Bank | +9.6% | +10.5% | 38.7% |
| IDFC First Bank | +23% | +26% | 49% |
| IndusInd Bank | +18% | +16% | 42% |
| Federal Bank | +19% | +17% | 36% |
Yes Bank’s growth, while improving, still trails top-tier private banks in advances and CASA performance, indicating room for operational catch-up.
Stock Price Performance Snapshot
| Duration | Price Return (%) |
|---|---|
| 1 month | -2.4% |
| 3 months | +6.2% |
| 6 months | +11.5% |
| 1 year | +18% |
The stock has shown decent recovery over the past year, though it remains significantly below pre-reconstruction scheme levels (~₹60+ per share in early 2020).
Investor Dilemma: Buy, Hold, Or Exit?
Advantages Of Holding Yes Bank Stock:
- Improving loan growth momentum and granular retail lending.
- Stable CASA ratios supporting NIM recovery.
- Restructuring behind, focus shifting to growth and profitability.
- Potential future upside if strategic capital raising or M&A announcements materialise.
Risks To Watch:
- Uncertainty around resolution of residual NPAs.
- Limited earnings growth visibility compared to larger private banks.
- Elevated competition in retail and SME lending segments.
- Potential equity dilution if large capital raise is undertaken.
Expert Recommendations
| Brokerage | Rating | Target Price |
|---|---|---|
| HDFC Securities | Hold | ₹20 |
| Motilal Oswal | Neutral | ₹19 |
| ICICI Securities | Sell | ₹16 |
| JM Financial | Hold | ₹19.5 |
Conclusion
Yes Bank’s Q1FY26 business update reflects a gradual recovery in its operational metrics, with steady advances and deposit growth boosting investor confidence. While dividend payouts remain low compared to peers due to capital conservation mode, a sustained recovery in net interest margins and profitability can improve its valuation trajectory.
For existing investors, analysts recommend holding with a close watch on upcoming quarterly results for further clarity on asset quality trends. For new investors, waiting for a stronger earnings turnaround or strategic stake sale confirmation before fresh entry could be prudent, as the risk-reward ratio remains balanced in the near term.
Disclaimer: This content is for informational purposes only and not investment advice. Consult a SEBI-registered financial advisor before taking any trading or investment decisions.
