The numbers look clean on the surface. Yes Bank posted a net profit of ₹1,080 crore for the September quarter, a 65% leap from the same period last year. But this headline figure carries a massive asterisk: it excludes any potential loss from the Additional Tier-1 (AT-1) bond write-off that has rattled the market since the Supreme Court intervened. The core business, however, is humming. Net Interest Income grew 22.7% to ₹2,822.5 crore, up from ₹2,301 crore a year ago, showing the core lending engine is firing on all cylinders.
Asset quality remained the steady anchor. Gross NPAs ticked down slightly to 1.2% from 1.3% in June, while Net NPAs held flat at 0.2%. In absolute terms, Gross NPAs stood at ₹3,875 crore, a modest rise from ₹3,704 crore, but the ratio improvement signals stability. Provisions dropped to ₹317.4 crore from ₹395 crore in the previous quarter, directly boosting the bottom line. Meanwhile, other income climbed to ₹1,881.5 crore from ₹1,644.3 crore, adding a significant cushion to profitability.
The balance sheet expansion is aggressive. Loans and advances grew 23.8% YoY to ₹3.09 lakh crore, while deposits rose 19.5% to ₹3.54 lakh crore. The CASA ratio improved to 33.7% from 30% a year ago, indicating better retail deposit mix. When normalized for Foreign Currency Non-Resident (FCNR) inflows, loan growth settled at 17.7% and deposit growth at 13.2%, suggesting the core growth is robust, not just a currency effect.
The real drama is off-balance-sheet for now. The Supreme Court’s decision to set aside the write-off of over ₹8,400 crore in AT-1 bonds has sent shockwaves. Shares dropped 14.5% on Thursday and another 3.4% on Friday to close at ₹17.50 on the NSE. Sources told CNBC-TV18 that the bank could recognize a ₹5,300–₹5,400 crore hit in the current quarter or push it to the December quarter, but not later. This potential hit dwarfs the Q2 profit, making the timing of the recognition the key variable for traders.
Investors are now split between the strong operational metrics and the looming legal overhang. The core bank is performing well, with healthy NII growth and stable NPAs. But the AT-1 issue remains a cloud. The next move will hinge on management’s decision on when to book the loss, which will likely trigger another bout of volatility. Watch the December quarter filing for the definitive answer.