Ladies and gentlemen, good day and welcome to Yes Bank's Q2 FY25 earnings conference call. On the management panel, we have with us today Mr. Prashant Kumar, Managing Director and Chief Executive Officer, Mr. Rajan Pental, Executive Director, Mr. Niranjan Banodkar, Chief Financial Officer, Mr. Manish Jain, Country Head, Wholesale Banking, Mr. Pankaj Sharma, Chief Strategy and Transformation 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 Q&A 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, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded.
Participants are requested to ask questions pertaining to the bank's Q2 results only. For any other information, you may reach out to the Corporate Communications team separately. I now hand the conference over to Mr. Prashant Kumar. Thank you, and over to you, sir.
A very good afternoon, and thank you for joining us for Yes Bank Q2 earnings call. On this call, I am accompanied by the senior team members of the bank. The Q2 performance of the bank has been extremely encouraging, especially when seen in the backdrop of industry-wide challenges, particularly in the form of persistent headwinds to deposit acquisition, as well as heightened stress in the unsecured segment. I would like to draw your attention to page four and five of our investor presentation, where we have highlighted our consistent outperformance to the industry in deposit growth, which is even more stark in the case of current account and savings account deposits. Similarly, despite the heightened stress levels in the unsecured segment, there has been a sustained improvement in our asset quality parameters.
Moreover, it is important to highlight that this outperformance is not just recent, but has been persistent over the last four to six quarters. Before diving into the details of our Q2 results, I would summarize our performance through following key data points. The bank yet again delivered highest quarterly profit since reconstruction of INR 553 crores, which is up 146% YoY, and 10% sequentially. The bank maintained its ROA at 0.5%, for the third consecutive quarter, which compares to 0.2%, reported in Q2 of FY 2024. It is extremely encouraging that this net profit growth has been driven by healthy operating profit growth of 22% YoY and 10% on sequential basis. The bank's deposit growth momentum continued with 18% YoY and 5% quarter on quarter growth.
CASA ratio improved to 260 basis points YoY and 120 basis points quarter on quarter to 32%. While the current account deposits have grown 26% YoY and 11% quarter on quarter, the savings bank deposits have grown 30% YoY and 7% on quarter-on-quarter basis. This has aided the bank in maintaining the cost of deposits, cost of funds, as well as net interest margin stable on a sequential basis. In line with our strategic objectives, both SME and mid-corporate advances grew at a superior rate of 26% each, while corporate advances continued the momentum from last quarter. The retail segment growth has been calibrated both on account of mix optimization, aimed at profitability improvement, as well as risk-based interventions across products. I will provide further insight into this a bit later.
However, we are still maintaining nil PSL shortfall across overall requirements as well as sub-categories during this quarter also. The bank sequentially improved their gross NPA ratio to 1.6% from 1.7% last quarter. The provision coverage ratio continued to improve and now stands at a healthy 70%. There has also been significant decline in the outstanding amount of restructured accounts at INR 2,100 crores, which is now only 0.9% of advances, and down from 2.2% in Q2 last year, and 1.6% in quarter one of this fiscal. The quarter on quarter reduction has been primarily on account of resolution and upgrades. The stressed assets within 2.2% of advances remain well within our guidance range.
I would also like to highlight that the growing strength in our franchise is receiving external validation through credit rating upgrade over the last two quarters. During Q2, CRISIL and CARE have upgraded the ratings on our Basel III, Tier 2 bonds, and the infrastructure bond to A+ from A earlier. We have also made few key senior appointments in our management team during the quarter. In line with our strategy to improve profitability in the retail asset segment, we have appointed Mr. Sumit Bali as the Head of the Retail Assets and Debt Management. We have also hired Mohit Mehta as the Retail Collection Head, and Mr. Niraj Bansal has been appointed as Head of Financial Markets.
Now, I would like to cover the key performance highlights of our Q2 performance, presuming that many of you might have already gone through our detailed results presentation, which was uploaded some time ago. For Q2, net interest income at INR 2,200 crores registered a growth of 14% YoY. The bank's net interest margin at 2.4% remains steady compared to last quarter. The non-interest income at INR 1,407 crores has grown 16% YoY, and 17% quarter on quarter. Core fee income of the bank, after normalizing for realized and unrealized gains on investment and treasury income, has grown 13% YoY basis and 9% on quarter on quarter.
Core fee as percentage of average assets further improved to 1.3% per quarter, as compared to 1.2% last quarter. The cost-to-income ratio improved to 73% in comparison to 74.4% in Q2, and 74.3% in quarter one of the current financial year. Normalizing for PSLC cost, operating expenses growth was contained at 11% on YoY basis, and only 2% on sequential basis. In Q2, the bank has once again achieved nil PSL shortfall in the overall requirement as well as various sub-categories. We remain on track to start seeing a reduction in the stock of aggregate deposits made in lieu of PSL shortfall, starting second half of the FY 2025 itself. This balance is targeted to reduce below 5% of our total assets over the next three years.
The bank reported a pre-provision operating profit of INR 975 crores for Q2, which is up 22% YoY and 10% quarter on quarter. The salient highlights pertaining to asset quality, slippage, recoveries, and the provisioning, they are by gross NPA ratio at 1.6%, improved from 2% in Q2 last year, and 1.7% in the quarter one. Net NPA ratio at 0.5% in comparison to 0.9% in the Q2 last year, and at a similar level compared to quarter one. Resolution momentum continued during the last quarter, with recoveries and upgrades of INR 1,021 crores during the quarter, including INR 258 crores of gross recoveries from security receipts. Cumulative recovery and resolution in the first half of FY 2025 has aggregated to INR 2,600 crores.
NPA provision coverage ratio was stepped up to 70%, against 67.6% last quarter, and 56.4% in Q2 of last year. Including technical write-offs, PCR now stand at 81.5%, against 80.1% in quarter one, and 72.1% in Q2 of last financial year. Net provision cost for Q2 at INR 297 crores, and as a percentage to average assets, it stood at 0.3% on annual basis. This was lower by 41% on YoY basis. Gross slippage at INR 1,314 crores, against INR 1,263 crores in Q2 last year, and INR 1,204 crores in Quarter one of this year.
Slippage ratio, as percentage of advances, is at 2.2%, against 2.4% in Q2 last year, and 2.1% in the previous quarter. Our balance sheet has registered a year-over-year growth of 14%, and CD ratio improved to 84.8% from 89.2% in Q2 last year, and 86.6% in quarter one of this year. Robust accretion continuing in deposits, growing at 18% year-over-year and 5% quarter on quarter. CAsa ratio, as covered earlier, came in at 32% as compared to 30.8% in quarter one and 29.4% in Q2 last year. CAsa balances at the end of Q2 has grown by 29% year-over-year and 9% quarter on quarter.
While the current account deposits have grown 26.2% year-over-year and 11.1% quarter on quarter, the savings bank deposits have grown 13.5% year-over-year and 6.6% quarter on quarter. The average daily balance for current account and savings account registered similar growth on year-over-year basis. Now, advances growth is 12.4% year-over-year. In line with our strategic objective, SME and mid-corporate advances continue to grow at a faster pace of 26% each on year-over-year basis. Further, the momentum in corporate advances continues with 22% year-over-year and 5% quarter on quarter growth. The retail advances growth is flattish on year-over-year basis and marginally lower on quarter on quarter basis. I would like to draw your attention to page 41 of our investor presentation, where we have provided product-wise growth rates.
If you notice, there has been differential growth across products. This has been on account of a couple of interventions. Firstly, as we have been stating, we are optimizing our product and sourcing mix to improve profitability of our retail asset portfolio. As a result of this, you can see higher growth rates in products such as affordable home loans, used car loans, credit cards, et cetera. The PSL contributing products are also registering high growth rate, such as rural banking and ISB, which is our MFI portfolio. The second intervention is based on our risk assessment in certain segments, geography, and products, where we have tightened the underwriting parameters to ensure better selection, as well as lower the impact of ongoing stress in the industry.
As a result of this, you can see that there has been a slowdown in growth of products such as personal loans. It is important to highlight that the second kind of intervention is more transitory in nature and will be reviewed on frequent basis based on prevailing conditions. The bank's average quarterly LCR for Q2 remains healthy at 132%. PCR now stands at ... Our bank CET1 ratio is today 13.2%, with total capital adequacy at 16.1%. This is despite the risk-weighted assets increase in select portfolio such as MFI. As I conclude, let me reiterate that Yes Bank's whole franchise has now gained significant momentum, and this strength is now enabling the bank to successfully navigate the various headwinds currently prevalent in the industry.
We remain confident in our progress towards building a franchise which delivers superior returns to our stakeholders. Lastly, I would like to take this opportunity to wish you for the upcoming festival season. On behalf of the Yes Bank family, I wish all of you a very happy and prosperous Diwali. With this, we can now take your questions.
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 their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. 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. We have the Sagi Rama Subba Reddy, an individual investor. please go ahead.
Yeah, good morning, Prashant Kumar sir, and other executive members in the call. So I, I've been individual investor of Yes Bank last four years before SBI taking over from last previous management. So here my question is like, you know, we are like delivering the good numbers like every quarter, every year on year basis. Despite all the good performance shown by Yes Bank, there is no significant growth in the Yes Bank share price. May I know what kind of actions are being taken by at management side? That is my first question.
And second question, as mentioned by the new management, after three consecutive years of the profit, we will be announcing the dividend, but somehow last year it has been, you know, not given to the shareholders. Maybe is it planned in the next year or, or how it is, if you could address? So, and the third question is like, basically, like, from the Japan and, Dubai, some big banks are going to buy the stake, and because of that, we can see that, last couple of, you know, year to date, Yes Bank share is performing down. So maybe if you could address these three questions, it would be helpful, for the individual investors, as a retail investor. Yeah.
So first of all, thank you so much for taking time out, and participating in this investor call. Responding to your first question, I think we don't comment in terms of the movement on the stock prices. We as a management team, I strongly believe that we need to focus ourselves in terms of sustain and continuous the performance, both in terms of business as well as the profitability of the bank. And if you have taken note that bank has been able to deliver both in terms of business growth and the profitability on a continuous basis, which is moving upward in the right direction, and we will continue to do this.
Your second question in terms of dividend after three years of profitability, we as a bank have a dividend policy approved by the board, and the board would continue to evaluate whenever we find it appropriate to distribute dividend to our shareholder. But at the same time, I would like to reassure you that we as a management team would continue to work in terms of optimization of return for all our stakeholders. Your third question, pardon me, but I think this conference call is limited on the basis of the performance of Q2 of the bank. Thank you.
Thank you. Thank you, sir. Thank you.
Thank you. Ladies and gentlemen, we request that you please limit your questions to two per participant. You may rejoin the queue for follow-up questions. We have the next question from the line of Param Subramanian from Nomura. Please go ahead.
Yeah, hi. Good afternoon. Thanks for taking my question. My first question is on the margin profile. As we know, I think the broader outlook for interest rates is probably downwards from here. So in that context, you know, considering we have a lower margin profile than our peers and currently a lower, you know, overall operating profitability, what measures will we be looking at to, say, improve or sustain this margin in the context of, say, moderating rates? That's question one.
Why don't we just complete the list of questions, then we will take all of them.
Yeah. Secondly, on the retail book, I can see, you know, we have, you know, a decent chunk of, say, unsecured retail, credit cards, personal loans. So how is that book holding up, you know, at present? Some color on that would be great. Yeah, that's it from me.
Okay. Thank you, Param. On the margin profile, so we're currently at 2.4%. I think it's important to first understand that there is one big drag that comes from the RIDF.
... assets that we are holding in the legacy of the past, and that's almost 11% of our total assets, and currently from a just on a pro forma basis, is pulling down the margins by almost seventy basis points. So as the proportion of these assets keeps reducing over time, and you know, we were so indicated that by March 2027, we expect this proportion to come be well below 5% from the current 11%, you know, which will, which will of course add to margins for the bank. That's point number one.
The second point you mentioned was on, you know, as we kind of look at a reducing interest rate backdrop, you know, I think, just from a matching of the assets and liabilities from interest rate perspective, I think we believe that we are fairly matched. However, as we kind of start seeing interest rates coming down, it is possible that you will see some lead and lag in terms of the pricing. So it is possible that, your, let's say, reporting accounts will get repriced immediate. And some of the deposits may not get, you know, repriced immediately.
But I think, just given the broad combination of assets and liabilities that we have, we do believe that over a six- to 12-month period, most of these things to end up neutralizing. Of course, depending on you know, how sharp the movements are, and if there are mismatches in the while the interest rates on funding can come down, but let's say if the asset pricing for whatever reason is depicting a different behavior, I think in those elements we will have to see. But just the direction of interest rates in itself may not necesSAily have an impact on the margin.
I think it will be a function of also, you know, what competitive landscape we see in the loan market and the deposits, because that will also ultimately determine the spread, and the demand and supply will determine whether the spread compress or expand. I think that's the response to question number one. The second question was on the retail. Just in terms of the proportion, I'm not sure, you know, if you have the information in that very context, we are running a very high, you know, unsecured book.
Yes, although we do admit that the delinquencies that are coming through in recent times, there is about one third of those, you know, 35%-40% of those are indeed coming from the unsecured book. And, you know, we would actually go back and just see what we've been saying. We've been consistently saying that there are early signs of delinquency on the unsecured side. In fact, we've also consciously slowed down on some of the products over the last three to four months. So both given the asset quality early indicator as well as our focus on asset quality, our focus on improving profitability, we've recalibrated the retail asset growth.
In fact, this quarter, after the disbursement rates having come down quarter on quarter, is actually, you know, September being the first quarter that the disbursement in retail actually has been higher than June quarter. Yeah, I think we have now kind of seen some improvement, but we will continue to be watchful in this particular segment.
Perfect. Thank you so much. No, I didn't mean to say unsecured retail is higher. I just, you know, from the perspective that our margins are currently lower and, you know, as you said, will improve, you know, the scope to go wrong is a little lower. So that is where I was coming from. But one other thing, just, is there the change in mix towards corporate? Is, does that have any margin implications? Yeah, that's it from me, and congratulations on the quarter. Thank you.
Thank you, Pam. No, so, yes, I think the mix shift, I think the, you know, clearly the speed at which, let's say, corporate, operates versus where the retail will operate will have a bearing on the margin. But, as I said, at least, we are confident that some of the ROAs that we kind of look at on the retail, we do believe that we will be able to drive better margins, not just from a margin standpoint, but let's say from a viewpoint of ultimate ROA. I think the second thing, what you have to also keep in mind is we also expect the start of the unwinding of the RIDF book, you know, kind of picking up speed from H2 fiscal 2025.
You know, some bit of margins will also start coming in from there. So while the mix recalibration might be a near-term phenomena for us between between wholesale and and and retail, it's not, it's not a structural change that we're talking about, it is more an internal phenomena. And I think we do expect margins to operate at similar to actually you know with a positive bias. But again, I'm not giving away some guidance on where the margins will end this financial year.
Perfect. Really helpful. Thank you so much.
Thank you. The next question is from the line of Jai Mundra from ICICI Securities. Please go ahead.
Yeah, hi, good afternoon, sir, and thanks for the opportunity. Sir, in the BSE release point 15, sub-part two, that gives, you know, the security value realizable bifurcation, and that shows that there are few security receipts which have a value of more than 100%, and then, you know, up to 150%. How to read this number? I mean, the outstanding value of SR is 843, which is your book value. But is there any mathematical way to understand what could be the potential recovery in absolute amount from this book, or that is not really too much information there?
So, Jay, if we, if we look at, I'm just putting... I'm going to put three numbers here, and again, I think this is something we discussed last time around as well. The book value is about INR 850 crores. The face value of these security receipts is in the handle of about 3,200 crores. And then there is a fair value which is getting reflected through the rating on the right. That number, again, I'm not, you know, putting a precise number here, the number that we are looking at is in the range of over INR 5,000-6,000 crores. So I think that's a range that the rating agencies kind of putting on from a recovery standpoint.
And, yeah, I think that's something that we have, we've kind of seen from a recovery perspective. Of course, I'm not talking about the timing of the recovery. These will happen as they have to happen, but that's, that's the number that is going with that.
Okay. Sure. Secondly, when you mentioned that in the waterfall, CET waterfall, that 10 basis point reduction is because of MFI and others, I believe the MFI number, right? I mean, I think you have given out one lakh crore of retail assets, retail loans. MFI is 2%, only, right? I mean, the ISB number, so is only, you know, 2,000 crores, MFI exposure. Is that the right understanding or, there is more to it, which is causing the 10 basis point decline?
So, on the risk weight, there were two, two large, I wouldn't say large, sorry, my bad for that, but, two segments in which we've looked at the risk weight going up. One was the MFI, and the other was the way we were for certain product class, the way we were looking at computing the market value. So there was some minor adjustment that we had to do on the market value from, let's say, you take a market value versus what is a realizable value, I think, the concept that we had to use for computing the LTVs. So both of them combined, the MFI and this adjustment in the LTV, which had an implication on risk weight.
Both of these adjustments was, I think, between about 12-13 basis points from a CET1 impact standpoint. So if you actually eliminate that, you know, you would actually see that the bank has maintained its CET1 despite actually growing, and that's because, you know, we continue to work hard on, you know, maximizing the rating letters from our customers. It's also a reflection that when we are lending to, let's say, the corporate NBFC side, where some of them are of the good quality customers, so it's getting inherently reflected in the risk weight profile as well.
Sir, I mean, we had highlighted some higher stress in the credit card book in some media interviews and also I think in the last quarter also. If you can quantify the gross slippages in credit card book, and if I see the growth, right, I mean, the PPT says that we have been growing 45% kind of a number. How do you look at growth as well as you know asset quality going forward?
In terms of, I'll just take the question on the specific number on because we are about, you know, 150-160 crores of growth with on the credit card book for this quarter. And I'll hand it over to Rajan on the growth. So, you know, in line with what are the developments in the market, the growth for credit card is going to be trending lower. We would be actually looking at a growth of around 20-25%, and then we'll be watchful of how the proceedings are actually in the market, how the portfolios are shaping up. So I don't think that the 40-50% kind of a growth number is what we are looking for going forward anywhere closer.
So this is probably off from the current levels. So just you know, sequential growth rate is already, if I just annualize the sequential growth rate, we are already clocking in the 30% range from the 50s. And like Rajan mentioned, you know, we think this will anchor in lower than 30%.
Right. Then last question, I think, did I hear it correct, that RIDF proportion should be coming down to below 5% by March 2026? Is that the way to look at RIDF?
You heard it correct, except for one minor correction there. It is not March '26, March '27.
Okay. Sure. The reason is that incrementally we may not... We are not putting any amount in RIDF, and hence as the book grows, and the numerator does not grow, that is how the proportion will come down. Or there is any other way around also?
... in substance, what you're saying is absolutely right, yes. Just that, again, minor clarification. At the net level, the book will come down. But just in terms of the gross operation, for some of the just previous non-compliances that we had, even before FY 2024, there will be some gross money that we will have to park, but the redemptions will be more than the gross money that we are parking. But the good thing is that the new money that we will be parking is actually at a rate of interest which will be higher than the existing that we have on the book. So, either way, you know, we in looking to improve margins through reduction as well as the rate on the RIDF.
But there could be a change in both numerator as well as denominator. So it is not only overall book is growing, that's why the percentage would come down less than 5%. Stock of RIDF would also start coming because of the repayment. Sure, sir. Thank you so much, sir, and all the very best.
Thank you.
Thank you. The next question is from the line of M. B. Mahesh from Kotak Securities. Please go ahead.
So just adding to the previous question again, you said 150 crores has come from ARCs. Even if you remove this number, the slippage is still running at 4%. Are there any other portfolio, like, how is the PSL doing and any other parts of the portfolio which is additionally causing stress?
Mahesh, if you look at the total book, if I look at, let's say, unsecured book, including credit cards, you know, we would about 1,100 crores slippage. About 35%-40% secured book, including, so yes, I think there is a play out of the delinquency coming in from personal loans.
Sorry, to ask the question again, did you indicate that the stress has peaked out, or are you saying that it will still run through for a few more quarters?
So in terms of the stress that we are seeing right now, we do believe that it will remain in this range for the next couple of quarters, you know, let's say March five, and again, I'm not kind of wanting to profile the number, but in the same range-
Sure, sure.
We don't expect a material elevation in the stress levels from here on. Nor, although our endeavor is to see, you know, we reduce the numbers from here, but our expectation is largely that we should be range bound over the next two quarters.
Just to clarify, in these borrowers that you're writing off today, that is also the personal loans and credit cards?
The write-off is, yes. So the write-off policy that we have managed is all non-property backed retail loans, we actually write off.
Sure, sure.
- at 180 days. So, the write-off will also include some of, let's say, for example, auto loans. You know, some of those products should also come and take up part of the write-off.
One clarification on the MFI book. How is your portfolio doing, and is that contributing to stress today, or will that contribute at a later point in time?
Actually, to be honest, you know, it's not a material book, and so far it has performed quite okay for us.
Okay. Perfect. Thank you.
Thank you. The next question is from the line of Dinesh Parekh from D.G. Parekh & Co.. Please go ahead.
Thank you very much for giving me the opportunity. Congratulations to the management for doing a very good performance. But, our equity is too large, 3,000 crore equity shares, INR 2 fully paid up. So 6,000 crore equity, if you have to pay dividend of 10%, then you have to, at least 650 crore will go for dividend. So at least every year, we have to double the profit minimum. Then, by 2027, we can have a EPS of INR 3 or 4. That is the only just... This is not a question, this is just, clarification.
No, no, I think we kind of are aware of some of the numbers that you're mentioning, Mr. Parekh. As Prashant mentioned earlier, just from a dividend standpoint, for us, we have to maximize, you know, the shareholder returns over a, let's say, a longer period of time, right? And you would appreciate that as banks, we also require capital to grow.
Right.
Just given some of the balancing that we have to do, and then you also mentioned about the equity there. But I think feedback taken, like we took from the first investors, you know, who've been with the bank for more than four years. So feedback taken, but we will continue to evaluate this on an ongoing basis, just in terms of our ability and what we believe is in the best interest of our stakeholders.
Thank you. Thank you very much. Thank you.
Thank you. The next question is from the line of Rakesh Kumar from B&K Securities. Please go ahead.
Yeah, hi. Thanks, can you hear? Can you hear me?
Yes, Rakesh, please go ahead.
Yeah, thanks. So, sir, couple of questions. Firstly, you know, on the other interest income side, so, you know, there is quite a lot of acceleration that we have in the first half so we have, you know, posted close to around INR 70 crore. This number used to be close to half, around INR 400 crore, INR 440 crore. So where is this number coming from? If you can, let me know, understand that.
Rakesh, any other question, or should we respond to this?
Yes, I have a couple of questions, other than this.
So Rakesh, sorry to interrupt, but your line is not very clear.
Okay. Can you hear me now?
This is much better. Please go ahead, sir.
Yeah. So I was asking about the third-party sales related income. That is also, there is quite a lot of volatility, like in the last three, four quarters. So that I wanted to understand. Secondly, write back of, you know, standard asset provisions, so what has happened there? And the tax rate is low. And then lastly, on this asset quality front, as you said just now, that this kind of run rate on the gross delinquency side would be there. So I was just thinking that in the last four years, we had an average credit growth of around 7.5%. We had also sold quite a lot of chunk to ARCs.
So now, with this kind of credit growth, should we have, should we have this kind of, you know, asset quality issue even going ahead? So these are the list of questions that I have, like, you may respond to.
Thank you, Rakesh. I think quite a number of questions I'll try and tackle one by one. So I think the first question was on non-interest income, and I think absolutely a valid observation. I would say volatility that you spoke about in context of third party. Let me just maybe extend that to some other elements of fees as well. Typically, you observe key performances at its peak in Q4. Q1 typically ends up being a slightly sluggish, sometimes, you know, materially lower than Q4. And then, of course, the momentum starts picking up again from Q2. So I would encourage that we do, you know, use that lens to begin with, when you are looking at the performance of non-interest income. That's one.
The second is if you just look at the absolute delta, we have about INR 200 crores of delta on the non-interest income. In that, about 100 crores is actually from the treasury line item, so it's not that all of it is coming from the granular. The treasury which had you know which across all trading line items et cetera we you know when we kind of sum it up we've seen about INR 100 crores of uptick on the treasury, but there are also some gains on sale of bonds, plus some IPO mandates in which we ended up making some money, right?
If I look at the core fees, of course, there are, you know, third party has done very well. I would say that we've also seen some industry trends where premium growth have also gone up, and that's also because there are some regulations that are likely to come in from first October. So the momentum did kind of pick up or accelerate in H1, because there could be some headwinds that could come in on the way incomes are recognized on third party. Not material, but yes, you know, some headwinds that could come in. So that's number two. I think you also had a question on tax rate.
So yes, I think there were some tax refunds, you know, which we had to clean up from a tax provision standpoint, and that's the reason the effective tax rate is lower in this quarter. We covered non-interest income. We covered tax rate. And the third party we covered. asset growth rate has been around 7.5%, right? Yeah. That growth rate, so you consider the asset quality issue going forward.
So, I think when you look at the asset growth rate, I would say from different perspective, I think you have to look at retail, because the growth rate in retail, the growth rate in mid-corporate were of a very different magnitude. And of course, there were some of the legacy books that we had in the corporate, which was unwinding. And what we are seeing right now, Rakesh, is that vintages on the retail growth that played out, let's say between fiscal 2022 and 2023, those vintages have caught up here with the book and, you know, it's also kind of coinciding with the slowing down. So the ratio therefore might look elevated for the bank, because we've also slowed down the retail denominator. That's number one.
And number two, we are not, we are not denying or shying away from the fact that there has, there has been increase in actual delinquencies, you know, on a vintage basis. And that is where, over the last three, four quarters, we have been working towards making the right interventions, to make sure that, you know, we, we have the right, in the right sourcing, right underwriting, but more importantly, also the right collection, to, to drive, an effectively better performance, on asset quality.
Got it, sir. Got it. Thanks. Thanks a lot for the great response. Thanks so much.
Thank you, Rakesh.
Thank you. We have a follow-up question from the line of Jai Mundra from ICICI Securities. Please go ahead.
Thanks again, sir. So first on CAsa, right, and CA and sa both, I mean, you have been doing very strong growth. If you have, apart from the you know, usual deepening or engagement related stuff. If you have any other you know, thing which is working out for you, and if you have the you know, blended CAsa cost for the quarter, if that is available.
One moment, one moment. So on the on the CAsa momentum, I think what has played out for us is that we have been having a very segmented strategy around both leads, coupled with the surrounding area, catchment area penetration, what we have been guiding our field force. But one of the big change what in the CA accounts we have made is first on the turnaround time, which I think is the industry best today. We open approximately 50% of our accounts within four hours. This has not been just, you know, opening of a SA or CA account. Our approach has been largely to sell the services, which means that a current account customer also needs a CMS.
He does, he does need many other allied services from the bank, and we have equipped our sales machinery to be able to render those services rather than selling off the account. So this is, this is one big attribution. The second attribution is on the, on the SA, where we are able to open most of our accounts in four minutes. Because of the, the wow factor involved, we are also able to cross-sell many other products, and that leads to a higher PPI, and thereby, the active accounts are playing out with larger margins. That is the second strategy. Third thing is we have also densified our branches in the last, you know, last one year, wherein we have put dedicated resources depending on the catchment area potential, and that has yielded results.
So I think this is not just one of the initiatives. There are a series of initiatives what we have taken in terms of a granular growth of the portfolio, which is yielding results and showing the higher numbers on the trajectory. But having said that, one thing which we have been conscious, and if you compare us with many other banks, you would see that our cost of deposit has not moved in, you know, in line with some of the other banks.
So the cost of deposit is limited at 6.1%, and that is largely because we have kept our costs under control, we have kept the rates under control, and we have kept it as per market, as per, you know, with the peer banks, but not shown any rational exaggeration to going for just the pricing, but rather it is a service-oriented retail expansion strategy, and that is what is playing out for us. Jay, on the issue of the CAsa rate blended, I think we should be in the 5.5 and 5.8%.
This CAsa growth, is it also helped by because you have a very disproportionate share in the, you know, I mean, the UPI float? Is it fair to say that at least some, there is some attribution from that business also in the balancing?
No, so, so certainly, certainly, Jay. So if you, if you look at the landscape of CAsa, right, so clearly savings account is predominantly the retail-led, let's say, franchise or balances that you see. Of course, the SME and retail also can be done on the current account, right? But on the corporate side, it is predominantly solutioning oriented, and our transaction banking, which is, a transaction banking platform, which kind of provide, you know, the current account offering as well. I think we do, I, I don't want to sound boastful here, but we, I think we do a fairly good job of providing the solutioning to our, our corporate customers.
So much so that, you know, we've said it before, we would have a disproportionately higher share, let's say, in fintech-led industry. So the solutioning we provide through the UPI as well, we end up having, you know, the floats in our current account, right? Similarly, we have the solutioning that we provide to a lot of our customers that even with, you know, even, let's say we may not have a disproportionately larger share on credit, but they're still wanting to come and bank with us from a cash management or a transaction banking solution. So I think it is a reflection of our, I would say, strength on providing the right solutioning to our set of customers.
Sure. And lastly, we used to give this recovery number and targets for the year. I mean, last time we had said around INR 5,000 crores. If you can just update on how you are seeing the overall NPA recovery, including, you know, NPA, PWO, et cetera?
If you look at our recovery run rate for the full year, this quarter, I think we've cumulatively on the NPA pool recovered about INR 600 crores. I think the cumulative number will be twenty. H1 is about INR 2,600, including the basic level. I think the trending, Jay, continues to be quite strong. You know. Yeah. I think we basically, I think we will be in the range of about, you know, INR 5,000 crores.
Good. Thank you. Thank you so much.
Thank you.
Thank you. Ladies and gentlemen, if you wish to ask a question, you may please press star and one on your touchtone telephones. The next question is from the line of Dev Dey from Horsepower Securities. Please go ahead.
Yes, good afternoon, gentlemen. Can you listen my voice?
Yes, yes.
Yes, may I ask you, why did the provision go up from INR 210 crores to INR 297 crores? What are the factors that made you to raise the provision?
So we have over the last, you know, few quarters working towards improving the PCR. So if you see, the PCR has gone up from 67.6% to 70%. That in itself translates to 100 crores of additional provisions.
Yes, sir, and my connected question relating to this is, at what percentage point of PCR are you comfortable with? From 70%, how much more do you want to increase it to?
So, PCR, we believe that 70% is a reasonable level to anchor around. For us, just from an actual recovery and expected loss standpoint, you know, we do believe that we will have recoveries in the ARC book, you know, which is meaning that I am already running a very significant PCR on that book. So blended PCR, both NPA and security receipts, is actually higher than 70%. But sorry, just to respond specifically to the question, we believe 70% is a reasonable number on the NPA to be anchored around.
Okay. And my last question is, your NII has gone down a bit. If you take the quarter on quarter number, around INR 40-50 crores, I believe, right?
That's right. So just call out, I know you'll go through the numbers as well, sir, but still to call out. So YoY, we've actually normalized it 14% growth, which is quite healthy. On a sequential basis, we did have, you know, some NPA recoveries that were sitting as part of the NII. And also just from an accounting standpoint, there is a dividend that we do get from the equity investment that did get accounted in the NII as well. So adjusted for that, actually, NII is sequentially higher as well.
What about your RIDF fund release? Eleven thousand or something like that, would it be released in the next month?
So that the trending of RIDF reduction is largely concentrated in H2 of this financial year. So we will see a gross redemption in the region of INR 10,000-11,000 crores. But, you know, we also believe that there will be some call for new RIDF placements on account of the past non-compliance. So on a net basis, we don't expect INR 11,000 crores of reduction in the net RIDF book. That net reduction should be in the range of about INR 5,000 crores.
INR 5,000 crores. From next year onwards, will you need to invest more in RIDF? I mean, what is the picture you are getting right now, if you say?
So for, on account of the compliances of fiscal 2024 and 2025, you know, we don't expect anything material that should come through. But, I, I'll just repeat what we said, earlier on the call. At a net level, the book, which is today 11% of our total assets, by fiscal 2027, we expect that book to be well below 5% of our total assets, because, the absolute value of 44,000 crores will keep reducing, quite substantially, over the next, two and a half years.
Okay. And your capital adequacy ratio has gone down a bit. Is that because of the changing the risk weightage of the assets?
So the CET1 actually has moved from 13.3% to 13.2%. Like I mentioned, the reduction is because we have applied higher risk weight on the MFI and those other products in which we've increased the risk weight. As a consequence, we've consumed about 23 basis points.
Okay. Okay. Okay.
Thank you. That was our last question, ladies and gentlemen. I would now like to hand the conference over to Mr. Prashant Kumar for closing comments. Over to you, sir.
Thanks everyone for participating in this conference for our Q2 results. Wish you and your family a very happy Diwali. Thank you.
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 line.