Yes Bank Limited (NSE: YESBANK) Q1 2026 Earnings Call dated Jul. 19, 2025
Corporate Participants:
Prashant Kumar — Managing Director & Chief Executive Officer
Unidentified Speaker
Analysts:
Dev Dey — Analyst
Ravi Shankar — Analyst
Ruchit Kapadia — Analyst
Abhijit Kumar Choudhary — Analyst
Jai Prakash Mundhra — Analyst
Unidentified Participant
Harsh Modi — Analyst
Raghvesh — Analyst
Presentation:
Operator
Please wait while you’re joining the conference the conference is now being recorded ladies and gentlemen, good day and welcome to Yesbank’s Q1 FY ’26 Earnings Conference Call. On the management panel, we have with us today Mr Prashant Kumar, Managing Director and Chief Executive Officer; Dr Rajan Pintal, Executive DiFY’26rector; Mr Manish Jain, Executive Director; Mr Niranjan Banodkar, Chief Financial Officer; and Mr Sunil Parnami, Head of Investor Relations and Sustainability. MR. Prashant Kumar will now give you an overview of the results, which will be followed by a question-and-answer session.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star and then zero on your touchstone phone. Please note that this conference is being recorded. Before we proceed further with this call, please note, while all efforts will be made that no unpublished price-sensitive information would get shared, in case of an inadvertent disclosure, the same would in any case would form part of the recording of the call. Further, some of the statements made on today’s call could be forward-looking in nature.A note to this effect is provided in the Q1 FY ’26 results presentation itself, shared on the Bank’s website. I I now hand the conference over to Mr Prashant Kumar. Thank you, and over to you, sir.
Prashant Kumar — Managing Director & Chief Executive Officer
Thank you. Thanks. A very good afternoon, and thank you for joining us for our quarter one earnings call. I am accompanied by the senior leadership team members of. As a part of our strategy, which we shared last-time on the profitable growth, I am pleased to share with all of you that quarter one was the seventh straight quarter of sequential expansion bank’s net profit at INR801 crores, which is 59.4% up Y-o-Y and 8.5% sequentially. During the quarter, the Bank improved the ROA by 30 basis-points to 0.8% against 0.5% in-quarter one last year and 10 basis-points sequentially.
Regarding pre-provisioning operating profit, Brand reported PPOP of INR1,358 crores, which is up 53.4% Y-o-Y and 3.3% sequentially. This marked the fourth consecutive quarter of PPOP expansion for the bank. The Y-o-Y PPOP growth has been supported by stable NIM, treasury income and continued discipline in expense management. For quarter one, the PPOP to average total assets is 1.3% against 90 basis-points at the same quarter last year, reflecting an improvement of 40 basis-points. NII for the quarter was INR2,371 crores, which is higher at 5.7% Y-o-Y. And compared to the NIM in-quarter one of last year at 2.4%, NIM has trended upward to 2.5%.
So the Y-o-Y margin increase can be attributed to reduction in deposits and hike of borrowings and also the retail saving and the TD rate cuts as though there was a challenge in terms of asset repricing impact on the NIM as due to the reduction in repo rate. The bank core income has grown by 3.3% Y-o-Y and we continue to see good traction in granular and transaction fee income with share of retail banking segment further improving to 56.4% in the four fee.
Our cost-income ratio is 67.1% against 74.3% in-quarter one last year. And if you exclude the expenses on PSLC, the quarter one operating expenses are up only by 5.7% Y-o-Y and 1.3% sequentially. The overall asset quality remained healthy with growth in net NPA ratio remained stable at 1.6% and 0.3% as compared to quarter-four ’25. NPA provision coverage ratio has further improved to 80.2 against 79.7% last quarter and 67.6% in-quarter one last year. The fresh gross slippage are INR1,458 crores against INR1,223 crores in-quarter one — quarter-four last year, the slippages trended higher from isolated pocket in a small book from microfinance, a small enterprise banking which is now part of the commercial banking, micro enterprise book and the mortgage which are part of the retail banking.
The unsecured segments of personal loan and credit cards are seeing improvement. The recoveries and upgrades during the quarter have been around INR1,170 crores. Credit cost at INR284 crores and as a percentage to total assets is 0.3% on annualized basis, partly supported by recovery of INR338 crores from fully provided for security receipts.
Moving over to business and the balance sheet items, advances have gone up by 5% Y-o-Y. In terms of segmental performance on advances, commercial banking and corporate and institutional Banking segment has gone up by 19% and 3% respectively. On the other hand, while the headline retail banking segment advances were flat Y-o-Y due to bank’s elevated approach, however, within retail banking, the micro enterprise banking advances has gone up by 11.2% Y-o-Y. For Y-o-Y book growth details of other retail asset products, you may please refer Page 20 of our investor presentation.
The total deposit at INR2.75 lakh crores has grown by 4% in-line with the advances growth. But if you see in terms of a deposit growth, which is coming from the retail and the branch-led in the deposits, they have grown by 20% Y-o-Y and at INR1.69 lakh crores. Our retail branch CASA ratio is also at 38.2%, which has gone up by 200 basis-points Y-o-Y. The wholesale deposit degrowth is mainly due to reduction in the term deposits on the wholesale side. At the quarter-end, CD ratio was around 87.5% and it reflects of our consistent balance sheet optimization and balanced asset-liability.
The RIDF and other PSL shortfall related deposits are down by 16%, which is a net drop of INR7,000 crores. And correspondingly borrowings have also been brought down by 16% between the quarter one last year and the quarter one of this financial year. In-quarter one, the average quarterly LCR remained healthy at 135.8%. The core equities issue, the CET1 improved to 14% with total capital adequacy at 16.5% on account of the muted growth of loan side, but also helped by the easing regulatory requirements. We as a bank have been making a steady improvement on multiple fronts over the past several quarters.
And in that backdrop, I’m pleased to share with you that the bank received multiple credit rating upgrades in June and July, which included international credit rating agencies Moody’s upgrading bank’s long-term foreign and local-currency ratings to BA2 with stabilize. Further, also upgraded baseline credit assessment to BA3 from B1 reflecting a stronger loss absorption. Recently, both ICRA and Tier upgraded banks Tier-2 bonds and infrastructure bonds to AA minus with stable outlook.
I’m also pleased to update you that in recognition of our unwavering commitment to deliver secure, seamless and innovative digital solution recently yesterday was honored with a special Award at the Divital Payment Award 2025 presented by Honorable Finance Minister, and this was in recognition for the prevention of and customer service. Further, both of Digital Super Apps which is by and this as well as our open-market UPI application called as Yespay for both Yespay and retail customers. And yes, it is again For both Yesbank and non-ES Bank business customers are seeing a very good response and for more details on these, you may please refer our investor presentation on Page 4244. As I conclude, let me reiterate that Yes Bank’s core franchise is gaining momentum and due to past intervention. This momentum is expected to be further fueled by our ongoing structural initiatives around CSM and business transformation. Our distinctive digital capabilities and market leadership across digital payment ecosystem. Having said this, fundamentally, the key for us has been and would continue to be disciplined execution of our strategy and we would like to thank you for your continued support. With this, we can now take your questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. The participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Dev Day from Hospower Securities. Please go-ahead.
Dev Dey
Good afternoon, gentlemen for the bottom-line figure. Am I audible?
Prashant Kumar
Yeah, yeah. Hello.
Dev Dey
Yes, yes. Congratulations for the splendid bottom-line figure and upcoming share purchase deal. My question is regarding the elevated NPA. On accounts the elevated input came from and I want to know the structure of the share sale deal I mean the share deal is only limited to the sale of the shares from the existing shareholders who came to rescue in the time of crisis or will it involve any further preferential allotment to the incoming buyer.
Prashant Kumar
So I think coming to your first question, okay, in terms of elevated NPAs, so I think I would just like to reiterate our gross NPAs remain at 1.6% and this was also 1.6% last quarter and 1.7% in the quarter one of last year. Similarly, our net NPA continued to remain 0.3% this quarter, which was also 0.3% last quarter and 0.5% in the quarter one of last year. So our NPAs as a percentage has actually not increased. Actually, if you see our loan growth has been only say 5% growth.
And despite this perspective, it has remained the same. So we are not seeing the elevated NPA issue at all, okay. Coming to your second question on the — whether the transaction would be only a secondary transaction or any primary. I think as of now, this is a transaction where the 20% would be — they would be taking 20% share only from State Bank of India and other banks who came in at the time of the restructuring of the bank in March 2000.
Dev Dey
Yes, just a random question. I mean, your management team has been in discussion with that buyer. So what is his intention? Is the buyer is intending to steep up the care of shareholding or are they happy with the 20%?
Prashant Kumar
So I think at this point of time, I think if you see the transition has happened between the SNBC, the prospective buyers and statement of India and other, I think it would be difficult for us to repair my
Dev Dey
Okay, okay, thank you.
Operator
Thank you. Our next question is from the line of Ravi Shankar, an Individual Investor. Please go-ahead.
Ravi Shankar
Hi, sir. First of all, congratulations on the quarterly result. My question is that my
Operator
Your line is not very clear.
Ravi Shankar
How about now, sir?
Operator
Yeah, please go-ahead. It’s a little better, yes.
Ravi Shankar
Yeah. So I’ve thought of asking an update about firm the — we were expecting 23% of being matured this financial year. So any update on that, sir? Can you rural infrastructure development
Prashant Kumar
Are not, not INR25,000. I think we shared with you this RIED of as there would be a repayment, which would be in the range of around INR8,000, INR9,000 crores. And this is aggressive what we have shared. RIED of deposit has come down by 16%, which is like INR7,000 crores in last one year.
Ravi Shankar
How that then sir, thank you so much.
Prashant Kumar
Thank you.
Operator
Thank you. Thank you. Our next question comes from the line of Ruchit Kapadia, an Individual Investor. Please go-ahead.
Ruchit Kapadia
Good afternoon. Good afternoon, sir. I hope you can hear me.
Prashant Kumar
Yeah. Please go-ahead.
Ruchit Kapadia
Okay. First of all, congratulations and thanks for giving me this opportunity to answer the question. My question is on the digital transformation. I wanted to understand if you can give or share specific examples of how Yesbank is leveraging either enterprise AI or the generative AI to drive the business outcomes such as improving risk management and increasing operational efficiency? That’s one. The second question on the same lines is that, do you have any plans to include such relevant KPIs as a part of your quarterly investor presentation deck.
Prashant Kumar
No, no, I think this is a very, very good point which you are raising here. I think in the future, there is a lot of opportunities at the export to implement the new technologies both on artificial intelligence and generation in terms of reducing cost and bringing the efficiencies. I think this is one area which is like a working profit. We are trying to pick-up some of the small use cases and like to see how the AI can be implemented in those pieces, okay. We have picked-up two, three cases but with completely in alignment with you that there are lot of opportunities where we can start using those new technology.
And definitely, we take your point and going-forward, in our investor presentation, we would share the development-related to the new technology being adopted by
Operator
Ladies and gentlemen to ask a question you may please press star and 1. Our next question comes from the line of Abhijit Kumar Chaudhary from CSC. Please go-ahead.
Abhijit Kumar Choudhary
Sir, hello. [Foreign Speech]
Prashant Kumar
[Foreign Speech]
Abhijit Kumar Choudhary
Thank you.
Operator
Participants you may press star and one to ask a question. We have a follow-up question from the line of Dave Day from Horspower Securities. Please go-ahead.
Dev Dey
Yes, gentlemen. I want to know regarding the credit growth, in the previous analyst meet, you — if I — I’m not wrong, you guided at least 12% credit growth, right? For the fiscal year
Prashant Kumar
Yes,.
Dev Dey
But in the first-quarter — in the first-quarter credit growth is not up is 12%, I believe, right?
Prashant Kumar
Okay.
Dev Dey
So then from which quarter you expect to credit growth to speed-up to meet your target?
Prashant Kumar
Yeah.
Dev Dey
No, no, sir. So you finish, then adjust I
Prashant Kumar
Okay. So first-quarter right, you know like is one of the slowest quarter in the economy always. And that’s why you see the growth for the banking industry in the first-quarter and is also in the single-digit. Last-time we also shared with you that we would like to see a credit growth between 12% to 15%, but at the same time, we would be focusing only on a credit growth, which will also give us the profits. So I think the profitable business growth was the key message which we gave last-time as quarter one was a growth.
But I think we are quite confident the way the interest rates in the market has come down, there has been an improvement in the GDP and I think some of the challenges in terms of trade negotiation would also be cleared in maybe next few days. Then I think the overall credit growth in the economic would further pick-up and we will be able to participate in that credit growth. But definitely, I would again like to reiterate our focus will be on a stress profitable credit growth. So just by drawing credit without making profit would not be good for any of our stakeholders, especially on the invested side. But I think we are said that we will be able to achieve these kind of credit growth in future
Dev Dey
Okay. I understood, but my clarity, I want to get a clarification from you that the whatever trades of say 12% to 15% or in-between any figure of that, the credit growth would be would be supported by your raising deposits or would you — would your capital position or fund position can easily accommodate that credit growth of 12% to 15%. I mean, are you targeting the credit growth through only raising the deposits or basically raising of capital is needed.
Prashant Kumar
So basically, there are two aspects of credit growth. One is the deposits, another is the capital. Capital we have sufficient. If you see our CAT ratio is 14%. So 20% capital ratio is very good in terms of supporting the growth. But wherever we would be growing on the credit, it would also be supported by the deposit growth, which we are confident today is not an issue, like if you see our branch banking deposit has grown by 20%. So depending on the requirement, we would be able to raise deposits. So either deposits or capital is not a constraint for the loan growth. We would continue to grow —
Dev Dey
No, then what percent of the growth in deposits are you expecting for this financial year? If the credit growth would be 12% to 15%, then there is some expectation at your end that there is some percentage — this percentage is required in the deposit growth, what would be the percentage?
Prashant Kumar
So whatever percentage we will be able to grow on the loan side, the same percentage we will grow on the deposit side
Dev Dey
Okay.
Prashant Kumar
Yeah, yeah. Thank you.
Operator
Thank. Our next question comes from the line of Jay from ICICI Securities. Please go-ahead.
Jai Prakash Mundhra
Hi, sir, thank you for the opportunity. Sir, a few questions. So first on Slide number 9, which gives the breakup of provisions. So we have collected INR338 crores from SR and now I think the book-value is zero. Is this number same as you know, provisions for investment, which is minus INR345 crores? I mean, is this number the same? I mean, whatever recoveries that we are getting from SR in this quarter and next quarter for in coming quarters, that would be come down as negative provision line-item.
Unidentified Speaker
So Jay, this is. That’s right. So whatever recoveries we cash flows we get from the ARC, either as redemptions or excess recoveries, that will flow into the provision for investments as a write-back.
Jai Prakash Mundhra
Sure. And Niranjan or Prashant, sir, if you have any ballpark number for, let’s say, for the next nine months, how should one look at — for this run-rate of INR340 crore INR350 crores, this is a normalized run-rate or there could be some material changes there?
Prashant Kumar
I think this is by and large a run-rate kind of thing. So we are looking for something around, say, INR1,200 crores to come from the security for the full-year.
Jai Prakash Mundhra
Okay, sure. And secondly, sir, while I understand that you are not a party to the secondary transaction which is happening, but if you can suggest a timeline, I mean this was the proposal went to RBI, for example, in May beginning and we are mid-July, you know what is your best sense in terms of timeline of their approval from RBI? Or does it involve anything from your end?
Unidentified Speaker
No, so I think fundamentally if you feel like the transaction was announced in the first week of May, okay. And as per our understanding, application has gone by the end. So we are expecting in view of the past experiences and that maybe approvals might be coming in the month of as you know this is a regulatory process. I think it will run its due and it’s also not fair on our part to be suggesting a timeline and also expecting that we give you a timeline on this no, that is right.
Jai Prakash Mundhra
Just a normal previous experience, of course, this is not your in your hand, okay. So that is right. And sir, do you — let’s say, in case they get 20% and let us say they want to go a bit higher, do you — I mean, does the bank need capital A or you believe this 14% CET1 is good, but of course, higher can be even better. Or because the — the purchaser has a one lending license in the form of NBFC. So getting ahead of 20% can be a tricky thing. Your thoughts there. I mean, I just wanted to get some sense there.
Unidentified Speaker
Yeah, I can only comment in terms of whether 14% is sufficient for us or not. I think 14% CET ratio is good for us in terms of meeting our loan growth estimation for the current year. So we don’t see any immediate need for the. I can’t comment on the other part.
Jai Prakash Mundhra
Sure, sure. Okay. And the lastly, sir, on your NIM. So of course, you have one distinct advantage of RIDF and receiving RIDF. But if you can comment how do you pass the, rapport? Is it T plus 1 and you know what is your sense should The NIM be stable to rising only because you have this receding RIDF or you know, you may also have a NIM decline before it starts to rise up.
Unidentified Speaker
So Jay, if you can just clarify on the point you made on how do we pass-on repo T plus 1? Can you just help us clarify on that, please?
Jai Prakash Mundhra
So that we can miss. No. So I wanted to check if the RBI cuts the repo rate on, let’s say, fourth of 4th of June, a lot of banks passes on fifth or overnight or maybe one or two days basis for the EBLR loans. Of course, MCLR is monthly with certain reset, but the repo rate linked loan for a lot of banks is passed on immediate basis. So that is like plus one.
Unidentified Speaker
No, no understand. So just quickly to respond to that. The rate is passed on the next reset of that loan and the portfolio typically, you can take a safe assumption that we will reset every first of the month. So if you have, let’s say, a loan that we reset on 1st July, 1st August or 1st September. And therefore, if, let’s say, a rate action has been taken. And post the first of the month, it will only get reflected in the repricing starting the 1st of the next month.
Jai Prakash Mundhra
Right, right. So basis this, sir, and your advantage on RIDF and rate section that you’ve taken on SAR and the CD, what is your outlook on the NIM for the next — for the next quarter and maybe full-year?
Unidentified Speaker
Thank you. So, if you recall, we had a had specifically called out in our last results as well that — and this was in the backdrop of a cumulative 50 basis-point rate cut-back in April. What we had said is our objective through this interest-rate cut cycle is to make sure that ultimately we exit out of this cycle while maintaining the spread between TD rates and our loan yields, right? However, we understand that the TD rate, of course will take this time to reprice. And therefore on savings account, we wanted to use that to mitigate the compression that we would see, which is the interim compression in the loan spreads over TD rates.
And that’s why we did undertake the account rate cut in April. It was also part of a strategic design. So one was that was helping us mitigate the NIM, but it was also strategic design on part of the bank to really move away from a rate induced acquisition thought process to more the customer service and fulfillment thought process. So I think it’s a very material update. But anyways coming back. So had just with the 50 basis-points of cumulative rate cut, we would have — and which we had said earlier as well that we would have protected margins in this period and then we would have accreted at the end-of-the period — end of this financial year. Now with another 50 basis-points of rate cut that has come through in May in June first peak, what we — what we are observing is that there is going to be pressure on the loan yields.
And the peak of that pressure, we would see in the immediate future, which is September because as you also rightly said with the way the portfolio gets repriced, the maximum impact of this 50 basis-points and a part of the 25 basis-points from the previous cut will actually be in the quarter of September. And then December, the impact will be lower and then of course, as we exit December, you would have fully absorbed the impact.
Now from our vantage point, we are working on two principles here in this period. One, we continue to review our deposit rate in-line with where we believe it is right. So that’s one part which will offset and the fact that we have corporate deposits as well which you reprice faster also gives us some protection. That’s number-one. Number two, there is also some CRR benefit that will also start flowing in as we start looking at towards the end of September into December. And then of course, we have, as you rightly said, the RIDF, right? So we don’t — we will not want to give a specific guidance here, just given the way there has been a quite I would say material evolution of loan spreads in the market.
But what we — directionally, you could say that September might face headwinds, which we believe December should start looking closer to where we are today. And as we look at March, we should possibly see improvements as a combination of all the actions that we are talking about. But I don’t want to kind of in a specific number. Having said that, I think the last point I wanted to make on margins is that this is assuming that the incremental loans that we are seeing are operating — are going to operate at the similar spreads to where they are today. If the competitive intensity further increases as we go into, let’s say, September and December quarter, that will also have a varying from a margin standpoint.
Jai Prakash Mundhra
Sure, sure, Niranjan. Thanks. And lastly, sir, I, I mean, you were giving one detailed breakup of slippages into various retail products, which is now missing in this deck. If you can provide the — specifically the slippages and absolute number for PL and credit card or if you can suggest some direction there for Q1.
Unidentified Speaker
If you think at a portfolio level, you wanted to know what the slippage — gross slippage for up for PL and credit card, yes. So PL gross slippage is actually trending in the range of about, let’s say, about INR225 crores and credit cards would be in the range of about INR180 crores.
Jai Prakash Mundhra
Okay, sure. Thank you so much and all the very.
Unidentified Participant
Thank you. Thank you. Thank you, Jay.
Jai Prakash Mundhra
Sorry, you can complete, sir, if you — sorry.
Unidentified Speaker
Jay, this one additional data point that PL slippage has seen a reduction from about 240, handing to about 220 this quarter. And so car, which also is trending down with every quarter.
Jai Prakash Mundhra
Sure. Thank you so much.
Unidentified Speaker
Thank you.
Operator
Thank you. Our next question is from the line of Harsh Modi from JPMorgan. Please go-ahead.
Harsh Modi
Hi, thanks. Just wanted to understand the quantification of NIM decline over next couple of quarters. I understand that the biggest impact is in second-quarter and also a bit more compression Q-on-Q and 3rd-quarter. So especially on 3rd-quarter, I wanted to understand if that compression Q-on-Q is right. And if I could — if I would want to dimension it, especially given that rate cuts are coming saw it coming to TD rate cuts coming through how much is the deposit beta and how should we think about the quantum of decline over the next couple of quarters?
Unidentified Speaker
So Harsh, again, I will refrain from specifically speaking about a very near-term trend of how this plays out. What I can — what I can certainly say is, when we look at the yield on advances and I’m just talking about the stock book, which is floating, which is going to see the impact that book which is floating from a repo standpoint, I will see about a 50 basis-points impact in September quarter, right? Now if I were to look at what does this mean from a — from a NIM compression and I’m just saying is that stock book which is floating.
So our total repo-linked loans are about — are about cumulative floating-rate book is about 60% of that repo is possibly about 60% of that. So you can possibly do the math to say what that 50 basis-points implication works out on yield on advances. I think the point I wanted to leave with you is, while that impact happens, we continue to work on improving the yield structure on our loan book as well. So for example, when we look at, let’s say, retail disbursements, of course, the book is not — has not grown as much. In fact, it is flat.
But if I look at the retail loan yields, they are already operating at about 150 basis-points higher than where the stock is, right? And that — and to that extent, we do expect that there will be mitigation that will come through on the — on the loan yield compression, that’s number-one. Number two, we also have our ability to work-through an efficient balance sheet where you know the share of advances to total assets, how do we kind of work-through that in this period when NIMs are going through to see some pressures. And the last is, of course, we’ve also — we’ve also seen
Unidentified Speaker
Reductions in our borrowings. So there have been already a repayment of some long-term borrowings that we’ve had in the past. So the point I’m making, Harsh, is at the core level, while there will be pressure on-net interest margins in the immediate term, our objective is to see how we can best minimize that to possibly target maybe even a neutral situation, but I think it’s a function of how some of the market forces also play-out.
Harsh Modi
Yeah. So thanks to that market forces point, I’m getting a sense, I’m not sure right or wrong, but there are certain players who are already showing even in the early days some signs of a degree of indiscipline either on pricing or on credit standards because it seems a lot of players are looking at the certain kind of segments which are not very-high yield, mortgages, you can’t really compete with the biggest size. So a lot of the banks are competing for similar debt. Is that something that can pay us spoilers? And the second point question related is, if we are unable to manage external forces if competition is really hard, what else can you do at P&L level to protect your ROAs? Because ROA is already pain and if cost of fund or market discipline is something that can’t be managed well, I’m thinking can LDR go up from 87 to 1995 or like what are the other levers you can use? So two questions here, market forces on discipline and what can we do to manage your ROA at current levels? Thank you.
Prashant Kumar
Sure, Harsh. So on the first part, I think some of what you said is already got reflected in the way you look at our loan growth this year. So for example, if you look from a Y-o-Y standpoint, we are operating in the range of 5% to 6% loan growth. Of course, you know, there are specific reasons for that. But I think at a very fundamental level, wherever we believe that the pricing is not conducive or is not meeting the risk filters that we believe are relevant, we are not going after that growth, right? So I think if I were to look at, let’s say, a spectrum of prioritization, there is of course, profitability and then there is growth.
And what we keep — we’re trying to work is to find a good balance between the two equations with, I would say, a sharper focus on improving the profitability. So I think that’s the first point, right? The second is, from a margin standpoint, we will continue to see reductions in our RIDF books. So I think that’s clearly one part that is — that is playing out in — from a net interest margin. Second is on our — on our ability to drive cross-sell and consequent opportunities from a fee, I think we will continue to work hard on that aspect. And the last is I think and which is also important is to continue to be very disciplined about our on our cost. And when I say cost, these are both upward operating cost and that we’ve already been able to kind of pull-back the growth, which are single-digit growth for the last, I would say, two or 3/4 on a Y-o-Y basis.
But importantly, also the credit cost, we are already operating at a PCR at 80%. Our view is that slippages should also start trending lower here on at a gross level and therefore what net goes into the GNPS. So while in the immediate term, even if you were to assume that there might be some pressure on the margin, our expectation is that we will continue to work-through our operating cost structure as well as credit cost and look to cross-sell from a fee landpoint. I think there are levers from a ROA standpoint that we will continue to unleash. But as I said, we are talking about a very near-term element of one or two quarters.
Structurally, as we look to exit fiscal ’26, we should — we should already have levers that indicate that net interest margin is on an improving trend and not on a declining price.
Harsh Modi
Wait, I’m sorry, the final question on the market competition, which segments you are letting go in terms of growth to protect profitability.
Prashant Kumar
So Harsh, I think let me let me bring this again into I think the three parts, right? First, if you look at the corporate segment, the large corporate segment, I think there is opportunity not only from banking, but their access to capital markets as well. So to that extent, if we find that the opportunities are wafer thin on margins, we will — we will not pursue. That’s number-one. Number two is when we look at our retail, now retail, if I break — if I break that retail book, while at the blended level, we are operating at a much higher yield. What’s happening is that we need to also grow that book faster.
But it’s just that at this point in time, and we’ll take the example of unsecured as a line-item. Unsecured has been effectively de-growing for us when I just look at, let’s say, the personal loan portfolio and it is degrowing for reasons well-known already, right. So we do expect that as the asset quality metrics on unsecured now are already stabilizing to already showing early trends of improvements, we can look to also improve that particular book. So once that happens, you will start seeing some benefits play-out as well. So I think there are some of these nuances that are playing out.
But just to respond to a specific question, it is it is essentially the large corporate to mid-corporate upper-end of mid-corporate where I think we do see very material — I would say shrinkage of margins. And from the retail, I think there are products like home loans, auto loans, which in any case, we have — we have been on a bit of a bit defocus over the last four to five quarters.
Harsh Modi
Thank you.
Operator
Thank you. Our next question is from the line of Ravi Shah from Equity Doctor. Please go-ahead.
Unidentified Participant
Yeah, am I audible?
Operator
Yes, you are audible, sir.
Unidentified Participant
Yeah. First of all, congratulations on a good set of numbers. Now I had two questions. First, regarding, I know that you are a secondary party, but if you can provide some information that recently the news has arrived that SMBC may go above 20% and make it to 25% also. And my second question is regarding, if you check the PPT number 54, you have provided the shareholding pattern for the quarter ended June. Okay. Now there is a 0.4% discrepancy. The total if we do addition, it is coming 99.6%.
Prashant Kumar
So I’ll take the second question, Mr Shah. Yeah, that’s actually been rounded up to one decimal. I think that is causing the total.
Unidentified Participant
I think no, it is not that because there is a 0.4 exact 0.49.6 is coming. So you need to check from your end.
Prashant Kumar
We will be happy to — happy to correct ourselves if that is indeed an error our part.
Unidentified Speaker
And coming to your first question on the news item related to the point, I think we would be in a position to comment on this
Unidentified Participant
Okay. Okay. Thank you, sir.
Operator
Thank you. Our next question is from the line of Ayan from. Please go-ahead Ayan, your line has been unmuted. You may proceed with your question. As we are not receiving a response from the current participant, we will proceed to the next questioner. We have the next question from the line of Manu De from Metro. Please go-ahead.
Unidentified Participant
Hi, good afternoon. So my question is on your long-term outlook for ROE. You have had this target of reaching 1%. So in the current quarter, of course, it’s 0.8%, but aided a lot by the treasury line. So what is the structural outlook on ROA, especially given the slightly subdued outlook on NIM in the near-term because of the systemic rate cut. Does that 1% target get pushed and if so, to which year and what are the levers that you see that the bank is having to reach that 1% ROA?
Prashant Kumar
I think what we shared earlier also that we would be aspiring for a 1% ROA in FY ’27 and say by FY ’30 would be in the range of 1.5%. We are quite confident and we are on-track of achieving that kind of number. You are right, the current 0.8% is mainly supported by the income. But at the same time, this is always a combination, either you would be getting a better lease on the loan side or if the rate of interest is coming down, you get an opportunity to make some money on the treasury side. Okay.
But fundamentally, going-forward, I think the lever for us is definitely in terms of NIM expansion, which would be mostly happening through the profitable loan growth as well as in terms of reducing our cost of deposit. So that is one part. And the second is also in terms of continuing to work on improving the non-interest income and at the same time, I think the we have taken for controlling the cost, we will continue to do that. The other part will be definitely in terms of the credit cost, okay, the credit cost which currently we have seen, I think we have reached to almost like 15%. In some sectors, it has already started improving.
So I think going-forward, we are quite confident that credit costs would also start coming and also with the lever from this part. And especially when the R&D balances will also start. Already we have seen a 16% balances on RIDF has come down. We are going to see further reduction in the current year. And I think in by say FY ’27, the RIDA balances would be less than 5% of our total. So I think all these things together, we are quite confident to achieve that 1% ROE by FY ’26.
Unidentified Speaker
So if I can just — sorry, add one more point here, Niranjan here, is while there are near-term pressures at an industry level from, let’s say, repricing of loans and therefore potential margin headwinds. It is not that these margins will not be recovered and therefore, I think the point you made, does that alter our long-term outlook for ROA from a margins lever standpoint, the answer to that is no, because while you might have some near-term levers — near-term headwinds, it ultimately over a period of, let’s say, four quarters or so will recover to start delivering the normalized net interest margins and
Unidentified Participant
I got it. Fully got it. But I have a related question. In fact, I was harboring that question when we server I’m responding to this. Is like at 1% ROA, what is your assumption of NIM for the bank?
Unidentified Speaker
So we will be operating at about — at about a 3% handle for a 1% ROA
Unidentified Participant
Okay. And that you are visibly confident that even if suppose there is another, say, 25 basis-points kind of a rate cut maybe in three months down the line, you will be able to recoup this 2.5% and go 50 basis-points higher by the exit quarter of FY ’27. Is that a correct understanding?
Unidentified Speaker
Ma’am, that’s the endeavor. Of course, with evolving market dynamics, I think we will have to keep watching and react to individual situations. I was also responding to an earlier question where if competitive intensity either is very-high or very low can also have bearings on margins. But from our controllables, we do believe that as we go through FY ’27, we should be able to deliver the guidance outcomes.
Unidentified Participant
So this — sorry to deliver on this point. So this 1% ROA target is the exit quarter of FY ’27 or average for FY ’27?
Prashant Kumar
I think as of now, we are looking for 1% ROA for exit of FY ’23 and the average for FY ’27 of that.
Unidentified Participant
Okay, exit FY ’26 and average for FY ’27. Thank you very much and all the very best.
Prashant Kumar
Thank you.
Operator
Thank you. Thank you. Our next question is from the line of Raghesh from JM Financial. Please go-ahead.
Raghvesh
Hi, sir. Congrats on a great quarter you as well. I wanted to understand the math around the RIDF. So 4Q is INR44,000 crores what you had given in the PPP. Now Y-o-Y you have mentioned a kind of INR7,000 crore decline. My calculation indicates from last quarter, it was already at somewhere of INR36,000 crores. So how much has been the decline in this quarter? And if it’s not the fall in RID, I mean how much is the impact of the borrowings which have supported because Q-o-Q name maintenance is something not other banks have been able to do
Unidentified Speaker
Sorry, I’m just trying to try to note all the questions you’ve made. So one is on the RIDF. Yes, RIDF, the balance that we had was in the range of INR37,000 crores as of March and that number as we look at closing is lower at a net level by about — I think INR300 crores. So we continue — we are ballpark in the same range. I think the only — I mean there is some play of the recoupment that redemption that we would have seen in the — in the previous months — previous quarters closing stock was at a lower yield and what has gone out, which is a nominal number has gone out at a higher yield.
To that extent, there is also some play from a basis-point, but it may not be as material. So that’s — I think that’s one part. I mean, your question was emanating more from the margin standpoint. So if I look at, let’s say, yield on advances, yield on advances last quarter to this quarter, we’ve seen about 15 basis-points of reduction. And if I look at our cost of funds, we’ve again seen about a 15 basis-points of reduction. So I think to that extent, we continue to operate in a similar zone and that 15 basis-points largely comes from about a 20 basis-points of reduction in the cost of deposits.
So that is what is flowing into about 15 basis-point of reduction cost of funds and that’s getting reflected in therefore quite a comparable net interest margin structure for June quarter.
Raghvesh
And you also mentioned during the call that there was a contribution of lower long — long-term borrowings. So I mean, that is not the.
Unidentified Speaker
So what happens is, see, there are different mix that also kind of plays out. I think from a net interest margin standpoint, you know, the contribution of that on an average basis during the period. I think those are elements may not be as material while it is important because we continue to see improving trends now of redemptions in repayment in our borrowings. So for example, there was about INR550 crores of Basel III-compliant Tier-2 borrowing that got redeemed towards the end of June.
So is that a very substantial number? The answer is no, but that’s helping — that will help us get our borrowing cost lower. There is — there is also, you know there’s also been reductions on our infra bonds over the last two quarters. So that’s again going to help. But it’s — for us, there are a lot of these elements and levers that we will keep working on to keep reducing our cost of funding. There is just from a Basel III, Tier-2 bond standpoint, we will have cumulatively this year about INR4,000 crores of redemptions that we will have to go through and that also helps us from a cost of borrowing.
So yeah, I think just going back to I think a previous question that I was also asked, we will want to make sure that the headwinds that we face on the net interest margin from loan repricing, our objective is to see how we can maintain that in a very minimal impact margin in the absolute immediate term and then look to course correct and to improve
Raghvesh
Thank you
Operator
Thank you. Ladies and gentlemen, we will take that as our last question for today. I would now like to hand the conference over to Mr Prashant Kumar for closing comments.
Prashant Kumar
Again, thank you so much for joining our earnings call. And as we have stated last-time also, we would continue to work on its profitable growth and this quarter result is actually a demonstration of our goal to achieve that objective. Again, thank you so much.
Operator
Thank you. This brings the conference call to an end. On behalf of Yes Bank, we thank you all for joining us. You may now disconnect your lines. Thank you