Comeback for Yes Bank soon? CFO Niranjan Banodkar aims to end FY26 with 1% ROA – Details

Private lender YES Bank is targeting a return on assets (ROA) of 1 per cent by the close of the current financial year, according to its Chief Financial Officer Niranjan Banodkar. The bank expects this profitability metric to cross the 1 per cent mark on an annual basis in the next fiscal.

ROA measures how effectively a bank deploys its assets to generate earnings. A higher ratio reflects stronger asset efficiency and improved profitability.

Speaking to PTI, Banodkar said the bank is confident of exiting the fiscal with an ROA of 1 per cent, adding that it aims to deliver an annual ROA above that level in the following year.

In the December quarter, YES Bank posted a net profit of Rs 952 crore, up 55 per cent year-on-year and 45 per cent sequentially. The annualised ROA for the quarter improved to 0.9 per cent, compared with 0.6 per cent in both the previous quarter and the same period last year.

For the nine-month period, the annualised ROA rose to 0.8 per cent, up from 0.5 per cent in the corresponding period of the previous financial year.

Last year, Japan’s Sumitomo Mitsui Banking Corporation (SMBC) acquired a 24.9 per cent stake in YES Bank for around Rs 16,000 crore. Following the deal, SMBC appointed Shinichiro Nishino and Rajeev V Kannan as Non-Executive Non-Independent Directors on the bank’s board.

Banodkar said the bank is targeting growth of around 15 per cent. With SMBC’s entry, there is potential to scale further, but the bank will weigh the balance between accelerating growth and improving profitability over the coming months.

He also highlighted the resolution of legacy priority sector lending (PSL) shortfalls as a key driver of profitability improvement.

Since FY24, YES Bank has achieved full compliance across all PSL categories, ensuring no additional burden is added to its Rural Infrastructure Development Fund (RIDF) obligations.

Consequently, the bank’s RIDF exposure has steadily declined from a peak of about 11 per cent in FY24 to nearly 6.9 per cent in the third quarter. It is on track to bring this below 5 per cent of total assets by FY27.

As low-yielding RIDF assets mature, the bank plans to gradually repay higher-cost borrowings and redeploy funds into advances that offer better returns, further supporting margins and overall profitability.