Yes Bank Limited (YESBANK) Earnings Call Transcript
July 18, 2026
Earnings Call Speaker Segments
Ladies and gentlemen, good day, and welcome to Yes Bank's Q1 FY '27 Results Conference Call. On the management panel. We have with us today Mr. Vine M. Tonse, Managing Director and Chief Executive Officer; Dr. Rajan Pental, Executive Director; Mr. Manish Jain, Executive Director; Mr. Niranjan Banodkar, Chief Financial Officer; and Mr. Sunil Parnami, Head Investor Relations and Sustainability. Mr. Vine M. Tonse will now give you an overview of the results, which will be followed by a Q&A session. [Operator Instructions]. Please note that this conference is being recorded. Participants are requested to please ask questions pertaining to the bank's Q1 FY '17 results only. For any other information, you may reach out to the corporate communications team separately. I now hand the conference over to Mr. Vinay M. Tonse. Thank you, and over to you, sir.
Thank you very much. Am I audible, please?
You are audible, sir.
Yes. Okay. Thank you. Good afternoon, everyone, and I also thank you for joining us for the Aspen Quarter 1 FY '27 Earnings Conference Call. I know today, many of the banks are also coming up with the results, and I really appreciate all of you joining us. Here, I'm joined by my senior leadership team, and we look forward to taking you through the key highlights of the quarter, and we'll be very happy to answer your questions thereafter. Before I turn to our performance, let me start with a few words on the environment in which we operated this quarter. The Q1 quarter was characterized by resilient domestic demand. strong tax buoyancy and steady manufacturing momentum set against rising cost pressures and a more uncertain global backdrop. Encouragingly, the underlying momentum remains strong. Direct tax collections grew a healthy 16.4%. GSC stayed strong at nearly INR 1.95 lakh crores of collections in June Manufacturing has now been in expansion mode for 37 straight months. Industrial production hit a 5-month high led by capital goods -- the strength is also being reflected in the uptick in the system level loan growth over the past few months. One area of pressure was inflation, which rose to a 17-month high of 4.4% on food and fuel costs, prompting RBI to lift its inflation projection to 5.1%, though the monsoon recovered well after a dry start using some of that concern. However, on a positive note, the GDP growth forecasts have not been impaired. Now I turn to the highlights of our Q1 performance. It evens the backdrop which I just gave that at the core, this has been another encouraging quarter for us. Our net profit grew 3.7% -- 33.7% that is year-on-year to INR 1,071 crores. What I would really like to highlight is the quality of this quarter's January. We achieved these results even after moderation of some of our noncore income streams, such as gains from our security recent portfolio, which was significantly lower at INR 86 crores this quarter against INR 338 crores in the same quarter last year, and treasury income to was lower. There was a one-off interest income on tax refunds of INR 119 crores during this quarter. But even normalizing for that one-off, the underlying performance remains strong. In many ways, this is presently the outcome we had spoken about last quarter. About our core business gradually taking over from the one-off case, and that's exactly what's happening now with our recurring sustainable earnings engine, increasingly driving performance and that's exactly the direction we want to be heading towards. Our operating profit grew 25.5% year-on-year to INR 1,704 crores. Net interest income was up 17.5% year-on-year at INR 2,786 crores. And our net interest margin improved 20 basis points year-on-year to 2.7%. Also holding steady sequentially. We continue to benefit from lower cost of deposits, even as yields are impacted by the interest rate cut transmission and the change in mix. Having said this, our near-term aspiration is to move the NIM towards the 3% plus hand over the next 2 years, and the underlying levers are well understood. The continued rundown of the low lending RIDF and private sector deposits, disciplined deposit repricing and improving CASA mix. I would caution that with the rate cut cycle now on POS and deposit competition intense, margin expansion will be a steady structural client rather than a straight line quarter-to-quarter. The momentum has been a real positive for us. Our core fees registered a strong 18.7% growth year-on-year with broad-based traction across cars, third-party products for us, as it is transaction banking. Sustained cost discipline remains core to how we've done the franchise. Our cost-to-income ratio improved further to 62.8% from 67.1% a year ago, reflecting genuine operating leverage, income growing well ahead of costs. Return on assets for the quarter was 0.9%, and return on equity was 8.3%. Moving to the asset quality. We see a further improvement of asset quality in this quarter, and it has been the case despite the seasonality that the first quarter typically carries. On a reported basis, gross slippage was lower at 1.4% of advances against 1.6% in the previous quarter and 2.4% in quarter 1 FY '26. Normal is for an intra-quarter account movement in quarter 4, slippages are at broadly similar levels quarter-on-quarter. And most encouragingly, the improvement in the retail segment has continued with reduced slippages at the lowest in the past 10 quarters. And having said that, our work continues. Our GNPA and NNPA ratio stand at 1.3% and 0.2% respectively with provision coverage healthy at 81.7%. Our recoveries and upgrades for the quarter aggregated to INR 564 crores in including INR 86 crores from security resets portfolio. Despite the rapid gains from the ES portfolio in Q1, we maintained our guidance of INR 800 crores to INR 1,000 crores of gains from this portfolio for this financial year '27. Moving on to the growth and balance sheet. Growth was broad-based across our businesses. Total advances grew 18.3% year-on-year to INR 2.85 lakh crores. Within this, the corporate and institutional banking grew strongly. Commercial Banking, which largely includes MSME sustained its momentum at 17% year-on-year and retail banking advances grew 6.9%. I would offer one point of context on the headline number. The part of the corporate growth is transitional and shorter tenor in nature. However, on an average balance basis, the bank's underlying loan growth is in the 15% to 16% and that's the growth band we find comfortable for the franchise. And it sits squarely with our commitment to go in line with the industry or slightly ahead of the industry. It's also heartening to see retail disbursements growing at 27.5% year-on-year for this quarter. On deposits, the total deposits grew 14.3% year-on-year to INR 3.15 lakh crores. CASA deposits grew 14.3% year-on-year and stronger still at 15% on an average balance basis. a creditable outcome given the sharp rate taxes taken by us during FY '26 as well as in quarter 1 FY '27. Retail and branch-led deposits now comprise close to 60% of our total deposits reflecting the growing granularity of the franchise in a system where deposits are the binding constraint. Our granular branch-led liability franchise is exactly where we are choosing to complete. Ou capital and liquidity positions remain comfortable with the CET1 ratio of 14% and LCR of 18.2%. Now this has also been a quarter of significant external validation, and I would like to specifically highlight the recognition of our progress lesion the rating agency this quarter. Moody's upgraded our issue rating to the Tier 1. [ Car ] upgraded our Basel I Tier 2 and infrastructure bonds to B+. ICRA upgraded the same instruments and S&P Global has assigned the bank with inaugural international rating of BB+. Taken together, these actions are an important independent affirmation of the bank's strengthening fundamentals our improving profitability, better liability profile, enhanced asset quality, robust capitalize and the confidence drawn from strong institutional sponsors. These upgrades also carry tangible benefits for our funding costs, our wholesale and financial institutions relations and our brand. A few other updates moving towards the country. We were awarded the most sustainable bank at business today is India. India's most sustainable company in 2026 and we were also included in the FTSE 4Good Index for the fourth consecutive year. We were recognized also among the top 25 India's best workplaces in BFSI for the year 2022. Our NRI homecoming campaigns earned several awards for being most disruptive in the use of AI. To sum up, we operated this quarter in an environment of resilient domestic demand, but heightened external uncertainty. And against that backdrop, Yes Bank delivered a set of results that reflect consistency, discipline and steady progress on our stated priorities. Our compass for the year ahead is unchanged -- while our aspiration would be delivering a full year ROA around 1%, our focus would remain on improving the core profitability and grow advances and deposits around in a profitable and calibrated way. Deepen our deposits and CASA franchise, more margins structurally higher over the medium term, hold the line on asset quality with conservative proven. All of this anchored in our structure, which is the people, product, processes and technology structure and also along with collaboration with SMBC, all within the strong governance framework. We are ambitious about where this bank can go and also as realistic about the environment we operate in. Our foundation is solid. Our strategy is clear, and our execution is getting better every quarter and that gives me a lot of confidence on the road ahead. Thank you very much again for joining us. We will now be happy to take your questions.
[Operator Instructions]. Our first question comes from the line of Dev J with Hotspot Securities.
Congratulations to you for maintaining the performance to the level expected by us, okay? And excellent set of EPS numbers. So again, I would like to ask you about the, I mean, road map in future. So what would be the net order loan book, you were targeting by the end of this year?
Yes. So now, Dev J, thank you very much for this question. What we are looking at is just -- see, we are also looking at what sort of funding resources we have, and that gives us a lot of comfort as to our liquidity available. So now moving forward, we endeavor to grow at a little above what the industry would be doing it, and which is what has happened, it could be in the range of maybe 15% to 17%.
And my another question would be just a few days ago, your board has passed a resolution regarding the raising of capital, if I am not wrong?
Yes, yes, yes. So as far as the capital is concerned, it is -- this is an enabling or enabler for us to keep in readiness. But at the moment, we have sufficient cushion to grow for the next maybe 4 -- 3 or 4 quarters, right? But at the same time, we are keeping ourselves open and this is a market where we keep looking at opportunities. And if there is an opportunity for increasing our capital cushion, we would definitely not mind doing that, and that is where we kept the enabler in place. And we also have this thought process within ourselves that if our peers are better capitalized than us, -- is there a point where we should be looking at increasing our own product. But at the moment, we are comfortable. That's the point I would like to make.
Okay. Okay. So by the end of this year, are you going to see a very pleasing feature by the end of FY '27. What is the view of management.
Dev J, I didn't get you. What was it you said?
By the end of 2027, we will be able to give a very pleasant picture about this bank institution?
Yes, we are quite confident the way we are seeing the last few quarters.
Sure. Lets hope for the best.
Our next question comes from the line of M. B. Mahesh with Kotak Securities.
Sir, 2 questions. One is on entire deposits. Just wanted to understand -- how are you looking at that underlying opportunity? And where are you positioned on it currently?
On the SCR, a couple of things I would like to mention. One is there is a very strong demand that we see. And this comes from 2 aspects. One is the aspect of the pure deposits that come in -- and second is the aspect of leverage. On both of these, we are seeing very strong demand. And for the leverage part, -- we -- you may be aware that we need to have certain limits in place. And whatever limits we have already got -- we have filled them also on the leverage part. And we are doing a leverage as of now, we have decided that we will keep it to 9% -- I mean, 9x 9x, right? And going forward, we may change the leverage also if we feel that the market would look at us that way, right? If there is an expectation that we should raise it. But otherwise, as of now, we are keeping it at 9. And then we have -- though I cannot give a specific number to it, Mahesh, we are quite ahead of the market, I would say, or some of the other banks.
Sir, just 1 clarification. On this product, would you be getting any support from your the largest investor at this point of time? Or is it still a very an kind of a transaction that is happening on the ground? Second is that how...
So I'll answer this. For this particular transaction, we are not having a constant of any arm led. And we are in the process of working out certain limits. So we are looking actually getting something out of that.
So just to add, we are working with many international banks for their limits to make this facility available, including SMBC.
And how easier or difficult is it on the ground Or if I were to ask, what is the concerning factor for this product not having picked up as much as 1 would have expected it.
Mahesh, this is Niranjan, so if you just think about what's playing out, there are 2 macro themes playing out. One, the borrowing spreads globally have inched up right let's say, for the overseas financial institutions to take a macro view on India for a 5-year period, the spreads are higher now, right? That's number one. Number two, it's also a function of where the global liquidity is sitting. As you think about it, it's not that it is equally available everywhere because ultimately, somebody, some overseas geography or a set of geographies, we'll have to fund India for the size that we're looking at, which that has to go up by that month, not just. So it is a function of the process of the risk review and the limits getting set up across different institutions for a period of 3 years to 5 years, in a manner that is also commercially viable and conducive is I think that, that play is underway, and therefore, it has not been as fast as one would have been expected because there also seems to...
Perfect. Perfect. Perfect. Vinay, sir, you have seen this company now for closer to 5 months. And -- could you tell us in terms of having seen this now -- the issues that we are seeing from the outside is that the margin is the key problem within the margins there are 2 sides. One, we understand the cost side. There is also a problem on the yield side. So do you have some thought process on how does this improve from here onwards at? Do you think that you will still need some more time to give an answer to this.
No, no. answer has and of course, this is one of the most important priorities for us also as I came in here. And both these -- the initial thoughts, which I had the drivers of although expand the margin, and they're working fairly well. What I have seen in the Q1 MaheshjI, ,right? So basically, you are also aware that since last April, the previous April, right, not last -- the previous April, that the previous financial year, we have actually substantially come down on the cost of deposits. right? And that has played out very well for us without actually resulting in any attrition of deposits, right? So this is something which gives me a better pricing power. The cost of deposits going on, the cost of funding going down gives me a better leverage on the type of assets we are picking up. And also at our discussion, we are also looking at products which are increasingly giving us more yield, right? So I think that way, this is something which is not too much of a worry for us right now for the NIM expansion.
Right. And do you do have any number in might for, let's say, in FY '28, where are you seeing -- where do you want to see the margins?
Yes. I think north of 3 is something we would be able to achieve.
[Operator Instructions]. Our next question comes from the line of Narendra Porwal, an Individual Investor.
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Our next question comes from the line of Sajal Raj from Zeno Finance Private Limited.
So for my first question will be advances have grown faster than deposit this quarter. So how do you plan to balance loan growth with deposit mobilization going forward? Should we expect deposit growth to catch up over the coming quarters?
So -- Nirajan here, thanks for the question. So advances growth for us is, yes, certainly higher, but we said that in our opening remarks as well. that we always go through some tasty and lower the movements on the end of period balances. And therefore, a metric that we internally track is actually the daily average balances. And if I see the daily average balances for both advances and deposits for June quarter versus March quarter, -- the CD ratio actually has remained the same. So there's not been a worsening ratio. In fact, both growth rates for deposits as well as advances are in line. Number two, and it's a very important principal question that we will continue to focus on liability-related balance sheet expansion. -- the idea is never to really aggressively pursue assets in the absence of deposits. And you would have seen that over the last 3 years, -- our singular focus has been to continue to improve the quality of our balance sheet. So improving the CASA ratio and getting the higher share from branch banking or retail deposits, where have been areas of focus, and that's getting reflected in our cost of deposits as well. So if you look through the last 3 years, our bank actually has possibly deliver the best outcome on cost of deposits as compared to the industry at last. So I think that's an area that we are absolutely focused on. And I think your point is absolutely well taken that deposit growth will be an important constituent. And we will make sure that we are not accelerating on advances in the absence of deposits.
Our next question is from the line of Shreyas Simple from Nomura.
My question was on HR recovery. You had recoveries of around INR 8 crores versus last quarter of around INR 446 crores and higher in the previous quarter. Can you explain what is the reason for lower recovery this quarter.
Thank you for the question, Niranjan here. There is some echo. So my request would be if you just 1 view and then we'll be happy to take the second question from you. So on security receipts, I think absolutely a right observation. We have had a resumption the INR 86 crores as compared to INR 450. We have also been seeing that the face value of security receipts, which is now outstanding at INR 1,500 crores. It's coming down, right? So the recoveries that are going to come through are going to be a little bit more unpredictable, not that there is no store capital or stored value sitting in the security receives book. It is still very much there. So we have a face value outstanding of INR 1,500 crores Against that, actually, the NAVs are upwards of INR 2,000 crores and NAVs are today's present value. So if you actually look through from a gross recovery standpoint, the number would be slightly higher than that. But -- the resolution is a function of what JC Flower does, their execution, and we have no control on the pace or the timing of those executions. So we will go through these periods where 1 quarter could have a higher security resolution. In another quarter, we may have a much lower. But at a very structural level, we said that during fiscal '27, we do believe let's say, anywhere between INR 800 crores to INR 1,000 crores for the full year should be a number that we expect to come through. But as I said, I want to caveat that. It's finally a function of what JC flower does. So it is possible that we could get higher than 800,000. It is also possible that we could also be slightly lower. But our sense is 800 1,000 should be a reasonable probability to ascribe for fiscal '27.
Yes. My second question -- my second question was on one-off in net interest margins. You highlighted that INR 119 crores of interest on IT refund -- if we remove that, the margins are down around 6, 7 basis points according to my calculations, can you explain -- I mean, what are the things that will help us improve margin from here on?
So Shiv, I think one clarification. -- is that the interest on refund actually forms part of our noninterest income and not part of the net interest income. So it is not -- although the it is interest on income tax refund. We do not include that as part of the NII line. And therefore, it's also not part of the net interest margin computation. So to that extent, there is actually no adjustment. Our net interest margin continues to be stable on a Y-o-Y basis. sorry, on a Q-o-Q basis, my apologies on the Q-o-Q basis.
[Operator Instructions]. Our next question comes from the line of Jai Mundhra from ICICI Securities. We do not seem to be receiving a response from the current participant.
I think we could hear, Jai.
One moment, I will bring him back on line. Sorry to interrupt, Jai. We request you to please repeat your question.
Sir, I wanted to check on your capital raising plan. We have a board approval in place. And we also have a court case which is spending the outcome is still pending. We have a decent 14% CET1, but I just wanted to check your time line and quantum and would this have any bearing from the court case?
So Jai, Niranjan here, I think first region here. So is quick clarification, which is your second part of the question, whether this capital raise has been linkage with the Board, with the A100. So we follow a practice of having an enabling approval in play, and that is something we have continued from last year. So we had the same approval for fiscal '26. We also have the same approval effectively for fiscal '27, actually until the date of AGM. So it is not a trigger of any particular event or court case. I think that's the first clarification. The second point is at 14% core equity ratio we do believe that we have reasonable capital for at least the next 1 year of growth. What gives us that confidence is also because we do have the DTA, which is available to us. So one, the ROE structure itself is improving. So let's say, a ROE of about 8% to 8.5% is accreting to my capital. But more importantly, the effect of DTA on that ROE is also playing out, meaning the bank is able to actually grow at anywhere between 12% to 13% of risk-weighted assets and not consume capital. And therefore, even if the growth were to be in excess of 13%, let's say, 15% to 16%, the quantum of consumption of capital is lower. So the limited point I wanted to make is we believe 14% is reasonable for the next 4 quarters of growth. Having said that, capital is a subject that the reason we keep an enabling approval is because sometimes capital, you want to look through raising capital which can take the 14%, maybe in line also with some of the peers because it also adds to buffers, right? And we've kind of tracked some of the other banks, that's the way that the rating agencies also look at us. more buffers are always could. And that's something we've worked on over the last 3 to 4 years. So if you go back to our last capital raise, we had actually raised it when our CET1 was at about 11% to 11.5%. This time around, clearly, we don't want to talk to those levels. We will raise it, let's say, in the 13% handle, right? So we want to keep adding to our buffers as well. So whenever we think that opportunity is right available with right players, that is in the interest of our shareholders, we could -- we do want to keep that optionality available to us, hence, an enabling approval.
That is very helpful. And should we just -- I mean, regarding the court case, of course, this is matter, and we will be hearing from the quote itself. But -- has the bank -- I mean, there's no pending provision, right? I mean if it come it comes, right? There is no -- when there's no backup for in case the decision is adverse, right? That is how it should be.
So there is no adjustment to our financial statements on account of this court case at this point in time.
Right. Okay. And secondly, on the retail growth, right? So overall growth has been strong. We are now 18%, which is slightly higher or maybe similar to system, but that seems to be driven by corporate in a large part. Retail is still 7% types. So what is your strategy now retail slippages also seem to be multi-quarter low. How should one look at the retail growth for, let's say, FY '27.
This is Rajan here. So retail is actually on a very strong visit and largely 1 of the reasons being that the slippages are under control. And last 1 year, we have really worked on the platform, scorecards and also refresh policy refresh. So from here onwards, the trajectory from being flat to a 7%. So this is one journey, which you look at from a book perspective. But on an incremental basis, actually, this is a business which is growing between 25% to 30% depending on segment to segment. Where our portfolio remains flat for a year or so, the book takes some time, but on the momentum of the fresh business, we are on a -- in a very steady state and in a good state to be in a good range of 25% to 30%. Now this will start reflecting in the subsequent quarters when it comes to the book growth point. But right now, we are very, very strong on the disbursements.
Okay, sure. So I mean, can we reach like mid-teens number by FY '27. That is how -- because at some point of time, the disbursement will translate to loan growth, right?
Yes, sure. Absolutely. We are working towards that as well.
That's helpful. And secondly, on recovery targets, sir, I mean if you can specify either from SR recovery and overall recovery, we used to have a INR 5,000 crore odd numbers. But of course, after that, a lot of recovery has already happened. So what would be your sense for FY '27 recovery numbers?
So the other recoveries that we were talking about, right? One of the reasons we were talking about the gross recovery number at that stage was because -- some of it was also predicated from the corporate resolution. To be fair, I think we would not ascribe a lot of value now to the corporate resolution because that story is behind us. So what we now sit with is really the JC Flowers ARC, and which, like I mentioned, as compared to last year, about INR 1,500 crores at least we do believe that anywhere between INR 800 crores to INR 1,000 crores is something we should see in fiscal '27 also playing out. On the retail recoveries and upgrades, that is anywhere now forming part of the net credit cost structure at the NPA. So we are now segregating that and dropping up we give you a headline number on the recoveries and resolutions. So I would say a very focus for us is really on the core ROA now. We said this last time as well, our objective continues to improve the core ROA, meaningfully, our expectation is fiscal '27, we should see a 15 to 20 basis point expansion in the core ROA. And if the resolutions let's say, the external factors on bond gains and trading with all of those elements also play out, I think we should be able to also deliver the fully reported 1% for fiscal '27.
Right. That is very clear. And Niranjan, lastly, if you have the ECL transitional estimate as to what could be the, let's say, onetime transitional impact for bank as you transition to ECL next year?
So we -- again, we've not publicly disclosed those numbers yet because we are in the process of putting that together. The ECL number we've said has a component of -- for us has an offset from the security receipts. So for us, if you allow us the benefit of security receipts, actually, there is no impact on ECLs. However, in the -- what's going to happen is that the ECL adjustment for security receives will not be allowed in the balance sheet. So we have to keep taking that through the P&L for the year. So at the gross level, there is likely to have some ECL impact. We don't expect that to be very material. Also adjust or take into account the fact that the new circular is also coming in on credit risk, risk-weighted assets from first April. So when we kind of look at both these circulars together, which is the ECL transition impact, and the new capital adequacy circular risk weights credit rate. We do believe that the impact, if at all, is not going to be material on our core equity. I think that's really the headline message, but we will come back during the course of this year as we firm up these numbers so that we can give you a better visibility of what impact would play out.
So no, that is very helpful, Niranjan.
Our next question comes from the line of Shryan Kheti with Sundaram Asset Management Company.
Just a quick question. I believe you had called out earlier that you're going to be more cautious in the commercial banking MSME segment. But then I saw that the slippages have gone up actually. So could you point out is there any specific segment or cohorting stress and what is the situation on the ground and impact from the recent macro situation?
So our commercial banking portfolio continues to be of high quality. And the slippages are quite controlled in Q1 as well. And while we continue to assess and monitor the portfolio very closely for any impacts of the West Asia war, but happy to report that there is very limited impact on the portfolio and the clients don't have managed this crisis very, very well. So international, the portfolio quality continues to be very good.
Okay. Perfect. And quickly 1 more. Just on the retail, again, I already answered some of my questions over there, but just a few more things. One is what products are you planning to be more aggressive on going forward? And where are you being more cautious? That's one. And second, the disperse number being lower, is that just seasonality? Or this can it be attributed to any other reason?
So on the -- I'll take the second question firstly. On the disbursement on a Q-on-Q basis, it is actually the seasonality because March typically is very high, plus there is an element of co-lending or partnership led, let's say, disbursements that kind of come through. But at an organic level, I think we continue to be quite similar levels this quarter as well. If I were to, however, bring your attention to the Y-o-Y growth in disbursements, that is actually close to 30%. So we're quite looking at continuing to focus on growing the disbursements because we know it is a matter of time before the disbursements will start resulting into the book growth. Because right now, there are not factors are also there. But as they are now start tapering because we had slowed down the loan book between 23% to 24%, 25%, right? We started slowing that down. So as the run rock starts going down, these disbursements will start also resulting into a book growth. And we do believe, I think that's about 3 to 4 quarters from now that we should be able to deliver double-digit growth as well.
And regarding the product strategy within retail.
So from our side, there is a multi product. So, a, to begin with, when you think about us stand you have to think that we are all weather universal structure of assets, right? It's not that we are dependent on any particular right? So when retail has been slower, we have the ability to work through the corporate engine or the commercial banking engine, right? So likewise, within retail, we also operate with multiple products. And therefore, it's also sometimes a function of where we see these growth tapering off. So for example, personal loans, we had slowed down quite meaningfully over the last 2 years, but we are now, again, growing that book. But there are certain channels through which we are growing faster than other channels, right? So I think that's one part. The second, there are certain products like LAP where we will continue to do because we did well in the past, and it's a growth -- it's a product that will continue to grow. Then there are products that we are now calling it as franchise products, where as and when our customers will need, let's say, of home loan or an auto loan, I think these will be products that we will also be willing to offer to this, right? So you combine all of this and add to it the fact that we also have co-lending structures in place, it is going to be quite diversified from, let's say, the product mix. I think certain guardrails with which we operate in, for example, the secured unsecured. So we will not allow a whole lot of unsecured to be dominant part of this. So typically, let's say, it's a 75-25 ratio, we will ensure that 75% secured versus 25% unsecured kind of retail, right? So I think that's really the broad theme. So I don't -- I'm not sure if you got the gist of the answer, but I think it will continue to remain largely diversified.
Wish you a best of luck going forward.
The next question is from the line of Rama Subbareddy, an Individual Investor.
So my question is like recently, Board has approved a capital rise of INR 16,000 crores, where a 10% equity dilution, right? So how do you ensure that the existing shareholders will not be impacted with that kind of capital in the future? Because if you see earlier, right, we were like, okay, basically, you have given a lot of discount for the new shareholders, such as the investors, right? -- and even SMBC also, they got a good price. So in the future, when you are rising this equity. So how do you ensure that existing shareholders not going to impact it because we have been saying for the last 6 years and we have not paid any dividends, right? And still we are expecting the bank will deliver the good numbers and been waiting for so many years. And you have to take care. So that is a concern. So can you please address.
Thank you very much for the question. And first and foremost, sir, thank you very much for being a patient supporter of the bank over the last many years. Our objective clearly has been to solve for what we think is the right strategy and the right quality of the bank, and you would see that over the last 2 to 3 years, the performance of the bank has continued to improve. We had always stated that the bank will deliver an ROA to exit FY '26 with 1%. I think we've delivered that as well. And there are clearly signs of sustainment that's playing out as well. Now as the bank continues to grow, there will be a need for capital because when we compare our core equity ratio compared to others, the other banks are also higher than us. But there are going to be levers that the bank will continue to use to make sure and we are not compromising or it is not coming at the cost of shareholder value. I think we -- that's also an important factor that we consider when we think through elements of capital base. Having said that, what I want to clarify, which I did in 1 of the previous questions, is that this resolution is an enabling resolution that we are seeking. This was a resolution that was also approved by the shareholders last year and we are only refreshing that enabling resolution. This resolution only keeps us -- gives the bank the optionality to trigger a capital raise in the event we believe that the raise is going to be beneficial for the bank for its growth and ultimately for creating value for shareholders. And that's really the objective with which we have gone about taking this resolution.
Our next question is from the line of Sunil Choksi with Indus Equity Advisors.
Congratulation on stable results Sir, I have a little different question than normal analysts to ask. Prospects for India, Japan businesses are getting better every day. Infrastructure financials, Japan is taking a big lead in India, be it bullet train, maybe now shipbuilding, many other aspects. Trade is concerned, India is likely to do much better with the country. And there are certain other specific government-related industry like defense and many other aspects also taking place. Can you throw some light that being a preferred partner of in a bank, we have some scope of business growth in the indo japanese business corridor.
Thank you, Choksi sir. Thank you for this question, which you said is a little different to what normally we get in the analyst meet. See a couple of things, which we observe now is that the Indo-Japanese corridor itself is getting strengthened, right, year after year. And particularly after the recent meeting intergovernment meeting, which happened and also within the prime ministers as well as the trade teams. We see a lot of traction happening much more than what has been seen in the last few years, I would say, right? And now with also the agreements that are in place, the corridor gets busy, that's for sure. Now the aspect of how we would be leveraging our partnership with SMBC is something we have already started working upon. We already have some MOUs in place. And eventually, our endeavor is to get the MAX -- that happens in this -- if I may put it this way, the corridor between these 2 countries, should happen through our bank. So this is our divend that's what we are already working towards and there are certain specifics which at this point of time, I'm not able to mention because of confidentiality reasons. But otherwise, we are very strongly working on these aspects, be it trade or bid investments or what you rightly said that there's a lot of infrastructure investment that is coming in from Japan into the Indian projects, right? And there is also a lot of interest that is seen from the Japanese corporates establishing some project or the other in India, built in the form of a wholly owned subsidiary or a joint venture or even some distribution channels out. I hope that answers.
Yes, that answers at least there is some visibility visible coming.
Definitely. Definitely. Definitely.
Don't mean that we have -- very good partner, where the government of India new scheme for FCNRB by RBI is visible. I am quite sure that we should be doing well because people tap Japan very often for the yields and the rate, no doubt the Japanese are looking upward transitory right now. FCNCRB, we should be doing much better than most of the other banks. Can I -- I missed the question because there are too many calls at the same are. So part for that. So any color which you think you do want to leverage rate or a straight deposit?
Yes. So in fact, you're right that this question had come up in the earlier part of this. But the -- what we are looking at is a max leverage of 9x this time at this point of time, rather right? So we will perhaps be sticking to that. And we are doing -- we are seeing a lot of interest that is coming in from various geographies and one of which is towards the east also importantly for us. And now whatever limits we had for the leveraging, One aspect is, of course, getting the deposits, right? The straight one is to one of a deposit. The as a pure-play FCNR deposit -- that is something which we are absolutely no constraint. We are getting quite a bit, which happens in our branch banking franchise. The leveraging part is something which we are also looking at fairly strongly, and we see a good growth that has already happened. And further growth will depend on the limits which we get from this some of our partners or the foreign tax.
Ladies and gentlemen, we will take that as a last question for today. I would now like to hand the conference over to Mr. Vinay M. Tonse for closing comments. Over to you, sir.
Thank you very much. And to all the participants in this call also, I would like to convey our sincere appreciation for coming in and joining us, knowing fully well that today is the day of many bank results that are coming up. Thank you very much.
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.
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