AI-generated · cited to primary sources · not investment advice
Yes Bank (532648) May 2025 Filing Analysis
Does management do what it says?
The Bank expects the overall Cost of Deposits to decrease by approximately 20 basis points due to Savings Account rate cuts. — target: lower by approximately 20 basis points (+1 more commitment)
“So we are expecting overall Cost of Deposits to be lower by approximately 20 basis points.”
Management expects the Cost of Deposits to further improve following recent rate cuts. — target: further improve (+1 more commitment)
“Just to call out, our Cost of Deposits has remained largely around 6% over the last six consecutive quarters, and with our recent rate cuts, we expect it to further improve going forward.”
See the full cited Management analysis of Yes Bank
How durable is the business?
The bank's ownership structure is shifting from a rescue-led consortium to a strategic global partnership with Sumitomo Mitsui Banking Corporation (SMBC) acquiring a 20% stake. This transition from the 2020 Reconstruction Scheme to a long-term strategic investor is expected to drive the next phase of profitability and value creation. (1 expanding)
“SMBC to acquire 20% stake from SBI and other Investor Banks; SMBC to become Bank’s largest shareholder... The transaction is a significant milestone to drive YES Bank’s next phase of growth, profitability and value creation, leveraging SMBC’s global expertise”
See the full cited Business Model analysis of Yes Bank
What could break the thesis?
The risk remains high but is transitioning into a phase of strategic partnership. While the legacy PSL drag persists, the entry of SMBC as a 20% shareholder (becoming the largest) is intended to drive a 'next phase of growth and profitability' which may eventually offset these costs through better global expertise and capital access. (1 stable)
“The transaction is a significant milestone to drive YES Bank’s next phase of growth, profitability and value creation, leveraging SMBC’s global expertise in this phase”
The cost-to-income ratio improved significantly to 71.3% from 74.4% in the previous year, though it remains high compared to top-tier peers. (3 easing)
“Cost-to-income ratio has improved to 71.3% from 74.4% in FY '24.”
The transaction introduces a new governance structure where SMBC will nominate 2 Board Members. This shift in management oversight is aimed at driving 'Global Governance Standards' and operational efficiency, though the high cost-to-income ratio remains a current reality. (1 stable)
“SMBC will have the right to nominate 2 Board Members on the Board of YES Bank... Benefit From... Global Governance Standards Of SMBC”
The risk is easing as the bank achieved 100% PSL compliance in FY25, leading to a reduction in RIDF deposits from 11% to 8.7% of total assets, with a target to reach below 5% by FY27. (1 easing)
“In FY '25, Bank had 100% compliance in PSL... which resulted in notable reduction of RIDF and other mandated deposits to 8.7% of Total Assets against 11% as at the end of FY '24.”
See the full cited Risk analysis of Yes Bank
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