YES Bank shares surge 3% after report of SMFG eyeing $1.1 bn investment, 5% stake buy

YES Bank’s stock price surged more than 3 percent during intra-day trading on Tuesday, July 16, following reports that Sumitomo Mitsui Financial Group (SMFG) is contemplating an extra investment of $1.1 billion in the private lender, as per media sources.

In relation to this possible transition, SMFG could additionally obtain around $680 million in convertible bonds. Moreover, the Japanese financial behemoth is reportedly considering acquiring a 5 percent share in Yes Bank from current investors like Carlyle and others. This advancement highlights SMFG’s increasing desire to broaden its presence in India’s banking industry via strategic investments in a top private lender of the country.

ICRA, the credit rating agency, has raised the rating of Yes Bank’s Infrastructure Bonds and Basel III Tier II Bonds totaling ₹24,460.80 crore to ‘ICRA AA- / Stable’. The upgrade indicates the bank’s expanding operational scale, improved loan portfolio with a higher portion of diversified lending, and ongoing decrease in stressed assets, all of which contribute to enhanced stability in its earnings and capital status.

ICRA also noted consistent recoveries from security receipts, which bolstered profitability in the latest quarters. Although these recoveries might decelerate, they are still anticipated to support short-term profits. The agency highlighted that the bank aims to improve its primary operating profitability to sustain a stable growth profile. ICRA also recognized the suggested stake purchase by Sumitomo Mitsui Banking Corporation as a favorable catalyst.

The bank’s capitalization stays robust, bolstered by strong deposit expansion. Nonetheless, ICRA pointed out that the proportion of wholesale deposits remains elevated. Significantly, the bank’s at-risk portfolio—comprising loans that are 31-90 days past due and restructured items—has fallen to 10 percent of its core capital as of March 2025, down from 21.2 percent the previous year.

In its preliminary update for Q1FY26, Yes Bank announced a decrease in both advances and deposits compared to the previous quarter. Loans declined by 2 percent to ₹2.41 lakh crore, whereas deposits decreased 3 percent to ₹2.75 lakh crore. Despite the decline, the CASA ratio was 32.7 percent in June 2025, an increase from 30.8 percent a year earlier, though slightly down from the 34.3 percent noted in March 2025.

The bank’s initiatives to enhance asset quality, coupled with capital and liability management, persist in propelling its operational recovery, although short-term growth momentum has slowed. The stock increased by up to 3.3 percent, reaching an intraday peak of ₹20.65. It is presently trading 24 percent lower than its 52-week peak of ₹27.20, reached in July 2024. Conversely, the stock reached a 52-week low of ₹16.02 in March 2025. In the last year, the stock has fallen by 22 percent. Nonetheless, for the year-to-date in 2025, it has recorded slight increases of 5 percent.