YES Bank Reports 65% Rise in Q2 Net Profit Amid AT1 Bond Ruling

YES Bank, a prominent private sector lender in India, announced a significant increase in its standalone net profit for the second quarter of fiscal year 2027. The bank’s net profit rose by 65 percent year-on-year, reaching ₹1,080 crore compared to ₹654 crore in the same quarter last year. This growth was primarily fueled by a sharp increase in net interest income and a reduction in provisions.

When compared sequentially, the bank's net profit showed a modest increase of 0.8 percent from ₹1,071 crore in the first quarter of FY27. For the first half of the fiscal year, the net profit climbed 47.8 percent, totaling ₹2,151 crore, up from ₹1,456 crore recorded in the corresponding period the previous year.

However, these results do not yet incorporate the financial repercussions of a recent Supreme Court ruling concerning the bank’s write-down of Additional Tier-1 (AT1) bonds valued at ₹8,415 crore. On October 15, the Supreme Court upheld the decision of the Bombay High Court, dismissing appeals related to the March 2020 write-down of these bonds.

YES Bank has stated it is assessing the consequences of this ruling and exploring possible legal remedies. The bank has not recognized any financial impact from the decision in its reported results. Due to this, the joint statutory auditors have issued a qualified review conclusion on the Q2 earnings.

A pro forma analysis included in the results indicates that if the AT1 bond impact had been factored in, YES Bank would have reported a net loss of ₹5,217 crore for the quarter and ₹4,146 crore for the half-year. Under this scenario, the bank's net worth would stand at ₹46,970 crore, with borrowings amounting to ₹86,149 crore. The return on assets would have dropped to a negative 4.3 percent for the quarter, while the capital adequacy ratio would have remained steady at 14.5 percent.

Other income for the quarter increased by 14.4 percent year-on-year, reaching ₹1,882 crore, up from ₹1,644 crore last year. Sequentially, it rose by 4.7 percent from ₹1,798 crore in the previous quarter. The treasury segment’s profit before tax nearly doubled, jumping 88.3 percent to ₹715 crore compared to ₹380 crore a year ago. Meanwhile, the retail banking segment saw its loss narrow substantially to ₹15 crore from a loss of ₹358 crore in the same quarter last year.

Operating profit before provisions and contingencies grew by 29.4 percent year-on-year to ₹1,678 crore from ₹1,297 crore in Q2FY26. Despite this, operating profit dipped slightly by 1.5 percent sequentially from ₹1,704 crore in Q1FY27, as operating expenses increased at a faster rate than income.

The bank’s provisions and contingencies decreased by 24.2 percent year-on-year to ₹317 crore, down from ₹419 crore in the prior year quarter. Sequentially, these provisions dropped 19.5 percent from ₹394 crore recorded in the previous quarter. Profit before tax benefited from these trends, rising 55 percent to ₹1,360 crore from ₹878 crore, while tax expenses increased to ₹280 crore from ₹223 crore.

Net interest income (NII) was a major contributor to profitability, increasing by 22.7 percent year-on-year to ₹2,822 crore, up from ₹2,301 crore a year earlier. On a sequential basis, NII edged up 1.3 percent from ₹2,786 crore in the preceding quarter. Interest income advanced 17.1 percent year-on-year to ₹8,640 crore, driven by a 17.2 percent increase in interest on advances, which rose to ₹6,600 crore. Interest expenses also grew by 14.6 percent to ₹5,817 crore.

Operating expenses climbed 14.2 percent year-on-year to ₹3,026 crore and increased 5.1 percent sequentially. Staff costs rose 15.6 percent to ₹1,164 crore, while other operating expenses increased 13.4 percent to ₹1,862 crore.

On the asset quality front, gross non-performing assets (GNPA) stood at ₹3,875 crore as of September 30, 2026, down from ₹4,055 crore a year earlier but slightly higher than ₹3,705 crore in June. Net NPAs were ₹757 crore compared with ₹771 crore last year and ₹677 crore in June. The GNPA ratio improved to 1.2 percent from 1.3 percent in June and 1.6 percent a year ago. The net NPA ratio held steady at 0.2 percent compared with the previous quarter and improved from 0.3 percent a year ago. Annualized return on assets remained at 0.9 percent, unchanged from the prior quarter and up from 0.6 percent a year earlier.

Regarding business growth, advances expanded 23.7 percent year-on-year to ₹3.10 trillion, while deposits climbed 19.5 percent to ₹3.54 trillion. The bank’s net worth increased to ₹53,268 crore from ₹49,197 crore in the previous year. The capital adequacy ratio under Basel III was reported at 14.5 percent at the end of September 2026, slightly lower than 15.0 percent a year ago and 15.1 percent in the prior quarter.

YES Bank’s Q2 performance reflects its ongoing efforts to strengthen its financial health following earlier challenges. The Supreme Court ruling on AT1 bonds introduces an element of uncertainty, but the bank’s operational improvements and asset quality trends indicate resilience. These factors are critical in the context of India’s competitive banking sector, where private banks are focusing on growth and stability amid regulatory and market pressures.