Deposit Growth Amidst Regulatory Focus on Deposit Accretion
FinTech BizNews Service
Mumbai, August 26, 2024 –YES BANK, India’s sixth-largest private sector bank, has achieved a notable 20.9% year-on-year (Y-o-Y) growth in total deposits, reaching INR 2,65,072 crore as of Q1FY25. This significant growth reflects the strong trust and confidence that customers place in the Bank, emphasising the successful turnaround that the Bank has scripted in the last four years. It also highlights the solid financial foundation and customer-focused strategies, that the Bank has implemented.
Amidst a challenging environment where the banking industry faces the task of balancing deposit growth with increasing credit demand, YES BANK has not only kept pace but has exceeded industry averages. This success aligns with the broader industry’s focus on deposit growth, as emphasised by recent regulatory guidance aimed at bolstering the financial resilience of the banking sector.
A key driver of YES BANK’s success has been its strategic emphasis on enhancing its low-cost deposit base. The Bank has seen a substantial improvement in its CASA (Current Account Savings Account) ratio, which increased to 30.8% in Q1FY25 from 29.4% in the same quarter of the previous year. This improvement is the result of the Bank’s focus on granular CASA deposits, leading to the addition of approximately 17 lakh new CASA accounts during FY2023-24. A 23% increase in CASA balances further strengthens the Bank's low-cost deposit base, showcasing the effectiveness of its customer acquisition and retention efforts.
This strong performance is also supported by strategic investments in expanding the Bank’s distribution network. In FY2023-24, YES BANK opened 133 new branches in CASA-rich clusters, bringing its total to 1,453 outlets across various states and union territories. This expansion has allowed the Bank to offer a broad range of financial products, deepening customer engagement and driving deposit growth. As a result, the Bank has achieved a Compound Annual Growth Rate (CAGR) of 22.3% in branch banking-led deposits over the past two years, significantly outpacing the industry average of 11.9% and the 17.4% CAGR among private banks.
The Bank’s outperformance in deposit growth can be attributed to three key factors:
· Productivity Gains: Enhancing efficiencies within its existing and expanding franchise
· Acceleration in Customer Acquisition: A strong focus on acquiring high-value customers
· Rise in New Acquisition Value (NAV): Improving the quality and value of the deposit base
As YES BANK continues to build on this momentum, its focus remains on sustaining this growth by deepening customer relationships, expanding its product offerings, and ensuring that its deposit growth strategy stays aligned with evolving regulatory requirements and market conditions.
Looking ahead, this impressive deposit growth positions YES BANK for enhanced financial stability, increased lending capacity, and improved profitability will be the key drivers that will enable the Bank to capitalise on emerging opportunities and further strengthen its market presence in the years to come.
