The bank's core net interest income rose by 14.3% to ₹2,200 crore, driven by a 12.4% growth in overall advances and an increase in the net interest margin to 2.4%. Non-interest income also saw a boost, climbing 16.3% to ₹1,407 crore. Overall deposits grew by 18%, in contrast to an industry trend of slower credit growth.

Looking ahead, the bank aims for a deposit growth of 17-18% and a 13-14% increase in advances for FY25, according to Prashant Kumar, the bank's Chief Executive and Managing Director. A senior official noted that the net interest margin (NIM) is experiencing a 0.70% drag due to balances in the Rural Infrastructure Development Fund (RIDF), but the outlook remains positive, as there have been no shortfalls in priority sector lending for the first half of FY25. The RIDF balances are expected to decrease gradually.

In terms of loan growth, the bank's corporate loans surged by over 21%, primarily due to strong demand from the mid-corporate segment. However, retail loans remained stagnant. A senior official explained that the lack of enthusiasm in the retail segment stems from market-wide stress observed in recent quarters and the bank’s focus on more profitable loan growth opportunities.

The bank’s gross non-performing assets (NPAs) improved to 1.6%, down from 2% a year earlier. Overall provisions, excluding tax, decreased by 40% to ₹297 crore, contributing significantly to profit growth. During the quarter, Yes Bank faced fresh slippages of ₹1,314 crore, with ₹1,179 crore attributed to retail assets. Notably, around 40% of the stress in retail loans was linked to unsecured lending, an area facing industry challenges.

The senior official indicated that slippages from unsecured loans have peaked and are expected to stabilize for the rest of the year before declining. The bank is not aggressively expanding its unsecured retail portfolio, reporting no increase in bounce rates and strong collection performance.

In a notable move, while many in the industry grapple with microfinance exposure, Yes Bank is actively pursuing acquisitions in this sector. CEO Prashant Kumar expressed confidence in microfinance as a viable business despite current cyclical stress, suggesting that now might be an opportune time for acquisitions.

Additionally, the bank expanded its workforce by over 1,000 employees during the quarter, increasing its total employee count to over 29,000. This growth aims to enhance collection efficiencies and boost branch presence to attract more deposits. The bank opened 18 branches in the first half of FY25 and plans to open a similar number in the second half, with even greater expansion anticipated for FY26.

Kumar also noted the challenges the banking industry faces with co-lending arrangements, primarily due to IT integration and credit underwriting issues. He refrained from commenting on reports of a Japanese lender’s interest in acquiring a stake in Yes Bank. The bank's overall capital adequacy ratio stands at 16.1%, with a core capital buffer of 13.2%.