YESBANK Q2 FY27 Earnings Call: SC Restores Rs. 8,415 Cr AT1 Write-Down, Net Profit Jumps 65% YoY

YESBANK held its Q2 FY27 earnings call on October 17, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Strong Core Quarter: Profit +65% YoY, Efficiency Gains

• Net profit of Rs.1,080 cr (+65% YoY) — operating profit Rs.1,678 cr (+29.4% YoY) and NII Rs.2,822 cr (+22.7% YoY) in Q2 FY 2026-2027; core fees grew +15.4% YoY.
• ROA of 0.9% in Q2 FY 2026-2027 vs 0.6% in Q2 FY 2025-2026; cost-to-income improved to 64.3% from 67.1% YoY.
• Advances +23.7% YoY reported (+17.6% YoY excluding FCTL); deposits +19.5% YoY EOP / +22.1% on average quarterly balances; CASA +15.5% YoY (CA +21.8%, SA +11.6%).
• Asset quality stable — GNPA 1.2%, NNPA 0.2% (both improved YoY), gross slippages 1.3% of advances, net credit cost 0.3% of average assets; Rs.395 cr P&L gains from the SR portfolio.
• Opex of Rs.3,026 cr (+14.2% YoY) — includes Rs.51 cr commissions, Rs.20 cr marketing, and Rs.31 cr from wage code changes.
• Segment growth — retail disbursements +35% YoY, commercial banking advances +20.2% YoY, corporate advances +31.4% YoY; LCR at 131.4%.

Supreme Court Restores Rs.8,415 cr AT1 Write-Down; CET1 Resets to ~11.4%

• Supreme Court (15 Oct 2026) upheld the Bombay High Court — setting aside the Rs.8,415 crore AT1 write-down of Mar 2020; the bank is evaluating legal and capital implications.
• Pro forma CET1 of ~11.4% in Q2 FY 2026-2027 post-judgment (vs 13.7% pre-AT1 impact); overall tier 1 capital ratio expected at ~13.7%, with CET1 including profits expected lower by ~240 bps.
• Management confirmed 11.4% CET1 is above regulatory minimums but below its prior comfortable level of 13.5-14%; it is not seen as immediately constraining growth due to DTA buffers.
• AT1 principal reinstatement guided as a balance sheet restructure (reserve to borrowing) with no cash outflow; coupon implications remain under assessment against the information memorandum.
• Stored capital lever — a security receipts portfolio with an NAV of Rs.2,000 crores (zero carrying value); the bank will evaluate capital raises without harming stakeholders.
• Credit rating agencies view the judgment as credit neutral for Yes Bank's rating, per management's interactions and agency bulletins.
• Management will abide by coupon payment conditions in the information memorandum; the CFO declined to comment on future coupon decisions, separating judgment evaluation from forward-looking strategy in two distinct phases. Analyst Marukh Adajania flagged that missing a coupon without "very severe circumstances" would impact sentiment around capital raises and impair bond/equity valuation.

FCNR Drag Tempers NIM; Repo Hike and RIDF Reduction Are H2 Tailwinds

• NIM of 2.6% in Q2 FY 2026-2027, with 12-14 bps moderation attributed to FCNRB mobilization; CFO Niranjan Banodkar cited FCNR deposits of ~Rs.18,000 crores (INR equivalent) and foreign currency term loans of ~Rs.15,000 crores creating a wider denominator and undeployed credit.
• Q3 FY 2026-2027 margins guided similar to Q2 with a marginal negative bias; Q4 FY 2026-2027 expected to carry a positive bias, aided by FCNR credit deployment, rising rates, and reducing RIDF balances.
• 25 bps repo rate hike (announced Oct 2026) — repricing starts Nov 2026; management guided a high single-digit margin benefit for Q4 FY 2026-2027, though a mathematical 8 bps improvement may be tempered by market forces. Competitive pricing pressures remain a headwind.
• RIDF reduction of Rs.8,000 crores guided in H2 FY 2026-2027 — Rs.4,700 crores in Q3 FY 2026-2027 and Rs.3,500 crores in Q4 FY 2026-2027; the Q3 benefit plays out in Q4 FY 2026-2027, and the Q4 benefit in Q1 FY 2027-2028.
• FCNR deployment expected to complete between Q3 FY 2026-2027 and Q4 FY 2026-2027; Q2 deployment was largely in short-term nostro balances, creating a temporary yield drag that will reverse as funds are channelized.
• ~65% of the loan book is floating-rate/short-term; CDs increased to ~Rs.11,000 cr in Q2 FY 2026-2027, framed as a tactical interim move (rating upgrades, LCR/NSFR considerations), not a strategic funding shift.

ECL Impact Offsets, MDR Upsize Unclear, UPI Share High

• ECL implementation CET1 impact guided at ~50-60 bps on the opening balance sheet, expected upon implementation in FY 2026-2027; management stated RBI's new credit risk circular offers a substantial offset, making the net CET1 impact immaterial.
• UPI volume market share of 58.7% (payee PSP) and 36.4% (payer PSP) cited by management.
• RBI's MDR rules present an upside to revenue streams per management, but quantification remains premature pending market dynamics and bilateral negotiations.

FY27 ROA Guidance Reiterated; FY28 Growth Funded Without Immediate Raise

• FY 2026-2027 ROA guidance of 1% reiterated for the full year, with H1 FY 2026-2027 at 90 bps; core ROA improved ~20 bps in H1.
• FY 2027-2028 ROA of 1% targeted — management expressed confidence in delivering it with minimal non-core reliance, with more emphatic guidance to come at FY 2026-2027 conclusion.
• ~11% growth possible without capital consumption at the current ROE accretion rate of ~8.2% (including DTA benefit), per the CFO.
• 15% growth in FY 2027-2028 would consume an estimated 30-40 bps of CET1; management stated sufficient capital buffers exist, with no immediate need to raise capital, and growth momentum will continue.

One Bank, SMBC Partnership, and Risk-Calibrated Growth

• H2 FY 2026-2027 execution priorities per CEO Vinay Tonse — driving the "one bank concept" for vertical synergies, deepening the SMBC partnership for cross-referrals (traction observed), and pursuing growth and scale.
• FY 2026-2027 priorities — improving core profitability, growing the deposits franchise and advances in a risk-calibrated manner, managing margins and operating efficiency, and maintaining asset quality.
• Capital planning flagged as a key FY 2026-2027 focus area — specifically to reassess the implications of the Supreme Court judgment and support future growth requirements.
• Management confirmed it will act in accordance with applicable legal and regulatory requirements, engage with the regulator, and keep the market appropriately informed following the Supreme Court judgment.
• Franchise progress — the bank reported strengthening the scale and quality of its franchise during Q2 FY 2026-2027.