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SMBC stake deal likely to be completed by September

Business Business: According to Yes Bank MD and CEO Prashant Kumar, the proposed stake acquisition by Sumitomo Mitsui Banking Corporation (SMBC) and other investors is likely to be completed by September 2025.

“SMBC has already applied to both RBI and Competition Commission of India. We expect the deal to be completed in the month of September,” Kumar confirmed during the Q1 FY26 earnings call.

The transaction is expected to take SMBC’s stake to 20 per cent. Kumar, however, declined to comment on specific details related to SMBC’s regulatory submissions, indicating that these questions should be directed to SMBC.

The bank reported a seventh consecutive quarter of profit growth, with net profit rising 59.4 per cent year-on-year to Rs 801 crore. While this was Yes Bank’s best quarterly performance since its reconstruction, Kumar emphasised that the growth was driven by tightly managed expenditure rather than aggressive revenue growth. “Most of the profit-loss increase has come from a reduction in operating expenses,” he said, indicating that there is little scope for similar cost increases in future quarters.

“Our focus is on profitable and balanced growth,” Kumar reiterated. He added that loan growth will remain in line with areas that offer good returns.

Retail advances remained almost stable year-on-year, with the bank deliberately reducing exposure to low-margin areas such as new car loans and prime housing loans. “This is a deliberate strategy. You cannot make money from these products,” Kumar said. Kumar added that the bank is being cautious in terms of unsecured retail loans, but is seeing improvement in default trends in areas such as personal loans and credit cards.

“In retail, we are not just chasing growth. We are only focusing on products where the return-risk balance is appropriate,” Kumar added.

Asset quality remained stable, with gross NPAs at 1.6 per cent and net NPAs at 0.3 per cent, while slippages rose to Rs 1,458 crore, mainly from small enterprise and micro-industrial accounts and some secured mortgage cases. “These were some isolated accounts which were already under stress for some time,” he said. Recoveries and upgradations stood at Rs 1,170 crore, including Rs 338 crore from secured receipts. “Since most of the slippages were in secured accounts, we are not worried about potential losses,” Kumar reassured.

The cost of deposits fell to 5.9 per cent from 6.1 per cent in the previous quarter, led by a reduction in savings account rates. Overall cost of funds improved by 15 basis points, which better aligns with declining asset yields amid falling interest rates. “We are continuing to control deposit growth in line with our loan book and liquidity requirements,” the chief financial officer said.

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