Synopsis:
Yes Bank gained investor attention after reports of Japan’s SMFG planning an additional $1.1 billion investment, potentially raising its stake to 25 percent. This follows SMBC’s earlier 20 percent acquisition.
One of India’s prominent private lenders is back in the limelight after reports surfaced of a major Japanese banking giant deepening its stake in the company. This potential investment has fueled fresh optimism among investors, driving the stock price higher as the bank positions itself for its next phase of growth and transformation.
The company in focus is Yes Bank Ltd, which currently holds a market capitalization of Rs. 63,895 crore. The stock opened today at Rs. 20.09, higher than its previous close of Rs. 19.99, and surged to an intraday high of Rs. 20.65, reflecting a rise of approximately 3.3 percent over the previous close.
What’s the news?
According to recent media reports, Sumitomo Mitsui Financial Group (SMFG), Japan’s second-largest banking group, is reportedly considering an additional investment of $1.1 billion in Yes Bank. As part of this potential deal, SMFG may also purchase approximately $680 million worth of convertible bonds and is exploring the acquisition of a 5 percent stake from existing shareholders such as Carlyle and others. If finalized, this fresh capital infusion would take SMFG’s total investment in Yes Bank to around $2.7 billion, increasing its overall stake to approximately 25 percent.
This development builds upon SMFG’s earlier definitive agreement announced on May 9, 2025, where Sumitomo Mitsui Banking Corporation (SMBC), a licensed banking arm under SMFG, agreed to acquire a 20 percent stake in Yes Bank. This transaction was promoted as the largest cross border investment in the Indian banking sector, subject to regulatory approvals from the Reserve Bank of India and the Competition Commission of India.
These strategic investments by SMFG and SMBC highlight growing foreign interest in India’s financial sector, especially in the wake of potential U.S. tariffs and shifting global capital flows. A diversified capital structure combining equity and bonds, as planned by SMFG, could also position Yes Bank to better navigate regulatory frameworks while accessing stable funding sources.
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Financial Snapshot
On the financial front, Yes Bank reported an increase in total revenue from Rs. 27,606 crore in March 2024 to Rs. 30,919 crore in March 2025, reflecting a growth of approximately 12 percent. Net profit almost doubled, rising by 90.3 percent from Rs. 1,285 crore to Rs. 2,446 crore. Profit before tax (PBT) grew by an impressive 109.6 percent, jumping from Rs. 1,538 crore to Rs. 3,224 crore.
Total assets expanded from Rs. 4,06,362 crore to Rs. 4,24,116 crore during the same period, marking a 4.37 percent increase, while net cash flows improved significantly from negative Rs. 38 crore to a positive Rs. 9,262 crore, reflecting stronger liquidity.
In terms of profitability metrics, the bank maintains a Return on Capital Employed (ROCE) of 6.36 percent and Return on Equity (ROE) of 5.44 percent. Its Debt-to-Equity ratio is relatively high at 7.45, characteristic of banking sector norms, and the return on assets stands at 0.59 percent. The EPS is Rs. 0.78, with a Price-to-Book value of 1.33.
In the latest quarter ending June 30, 2025, Yes Bank witnessed a sequential moderation in its key banking metrics compared to Q4 FY25. Loans and advances declined by approximately 1.97 percent, dropping from Rs. 2,46,188 crore to Rs. 2,41,355 crore. Deposits also contracted by 3.02 percent, decreasing from Rs. 2,84,525 crore to Rs. 2,75,921 crore.
The CASA ratio slipped from 34.3 percent to 32.7 percent. However, the credit to deposit ratio improved slightly from 86.5 percent to 87.5 percent, reflecting a relatively higher lending activity against deposits. Additionally, the bank’s liquidity position strengthened, with the Liquidity Coverage Ratio (LCR) rising from 125 percent to 135.7 percent, ensuring a comfortable buffer to meet short-term obligations.
Bond Rating & Strategic Outlook
Yes Bank’s creditworthiness has been further affirmed with ICRA upgrading its Infrastructure Bonds and Basel III Tier II Bonds worth Rs. 24,460.80 crore to ‘ICRA AA- / Stable’. This reflects growing confidence in the bank’s capital position and risk profile, aided by the potential capital infusion from SMFG.
With the backing of one of Japan’s largest banking groups, Yes Bank is poised for a robust transformation. The continued financial and strategic support from SMFG could pave the way for enhanced governance, operational efficiencies, and greater market confidence, positioning the bank well in India’s competitive private banking space.
Written by – Manan Gangwar
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