Yes Bank shares rise 5% on RBI Nod for SMBC 24.99% Stake Buy

On Monday, the Yes Bank shares rose by 4.7 percent touching a day’s high price of Rs 20.20 on NSE after the Reserve Bank of India (RBI) recently approved Sumitomo Mitsui Banking Corporation (SMBC) to acquire up to 24.99 percent stake in the bank, a transaction poised to reshape ownership in one of India’s prominent private sector lenders. This regulatory nod, conveyed in RBI’s letter dated August 22, 2025, is valid for a year and sets the stage for substantial foreign participation in the Indian banking sector while signaling strong investor confidence in Yes Bank’s turnaround prospects.

The approved transaction will see SMBC, a leading Japanese financial institution, acquire the stake primarily through secondary market deals. Specifically, SMBC aims to purchase a 13.19 percent holding from the State Bank of India and another 6.81 percent from seven other major shareholders: Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank, and Kotak Mahindra Bank. This deal is part of a previously disclosed arrangement from May 2025 and marks one of the largest foreign investments in India’s banking sector in recent years. However, despite becoming the largest single shareholder, the RBI has clarified that SMBC will not be categorized as a promoter post-acquisition, which is significant for Yes Bank’s governance structure.

The deal requires further clearance from the Competition Commission of India (CCI) and fulfillment of other customary conditions precedent outlined in the shareholder agreement, including lock-in requirements and post-transaction restrictions.

Yes Bank’s financial performance for Q1FY26 further underlines its positive momentum and strengthens the narrative around its revival. In the latest quarterly results, Yes Bank reported robust growth in standalone earnings, with profit after tax surging 59.4 percent year-on-year to Rs 801 crore, its highest ever quarterly profit since restructuring. 

The bank’s net interest income expanded by 5.7 percent to Rs 2,371 crore, supported by a 20 basis point reduction in cost of deposits and steady net interest margin at 2.5 percent, up 10 basis points from last year. Non-interest income soared 46.1 percent to Rs 1,752 crore, primarily driven by treasury gains and increased fee collection. The cost-to-income ratio has dropped to 67.1 percent from 74.3 percent a year ago, demonstrating stringent expense management and improved operational leverage.

Yes Bank’s advances and deposit base have shown sustained growth, reflecting enhanced customer confidence and expanding franchise reach. Asset quality remains stable, supported by proactive recovery efforts and prudent lending practices. The gross and net NPA ratios continue to trend down, bolstering risk management metrics. Capital adequacy stands strong following Q1FY26 results, which position Yes Bank favorably for future expansion and competition in the market.

The RBI’s approval for SMBC’s stake acquisition, along with Yes Bank’s improving quarterly financials, signals a new phase for the bank. Investors, analysts, and regulators are watching closely as the transaction progresses towards regulatory completion and as Yes Bank leverages its strengthened balance sheet and strategic foreign partnership to drive growth.