Federal Bank vs Yes Bank (2026): ROA, NIM, SMBC, Turnaround & Which Is Better?
Federal Bank and Yes Bank are unusually useful peers because their current market values are close while the franchises sit at different stages of development.
Federal spent recent years improving asset mix, CASA, margins and operating efficiency.
Yes Bank spent recent years repairing a much deeper balance-sheet and governance crisis.
By Q1 FY2027, Yes had already fixed much of the bad-loan problem.
The remaining challenge is harder:
turn a repaired bank into a high-return bank.
The BullRun Turnaround Ladder
A bank turnaround is not finished when bad loans fall.
There are at least five separate rungs.
Yes Bank has made remarkable progress on rung one.
It is moving through rungs two to four.
Federal Bank is already operating much closer to rung five.
Where do Federal Bank and Yes Bank stand today?
Q1 FY2027 comparison: the raw numbers
| Metric | Federal Bank | Yes Bank | Current Reading |
|---|---|---|---|
| Net profit | ₹1,176.9 Cr | ₹1,071 Cr | Federal slightly |
| PAT growth | +36.6% | +33.7% | Both strong |
| NII | ₹2,945.9 Cr | ₹2,786 Cr | Federal |
| NII growth | +26.1% | +17.5% | Federal |
| NIM | 3.33% | 2.70% | Federal |
| Deposits | ₹3,20,118 Cr | ₹3,15,373 Cr | Almost identical |
| Deposit growth | +11.37% | +14.3% | Yes Bank |
| Advances | ₹2,81,240 Cr gross | ₹2,85,118 Cr net | Nearly identical scale |
| Advance growth | +14.94% | +18.3% | Yes Bank |
| CASA ratio | 32.23% | 32.7% | Essentially tied |
| CASA growth | +18.26% | +14.3% | Federal |
| Credit-deposit ratio | ~87.9% simple gross advances/deposits | 90.5% | Federal more room |
| Cost of deposits | 5.21% | 5.4% | Federal |
| Cost-to-income | 52.50% | 62.8% | Federal |
| GNPA | 1.52% | 1.30% | Yes Bank |
| NNPA | 0.18% | 0.20% | Federal slightly |
| Provision coverage | 87.37% excluding technical write-offs | 81.7% | Federal |
| Credit cost | 0.41% | ~0.3% of average assets | Different denominator |
| ROA | 1.22% | 0.90% | Federal |
| ROE | 12.01% | ~8.3% | Federal |
| CET1 | Strong growth capital | ~14.0% | Both adequate |
| Strategic shareholder | Institutional ownership base | SMBC ~24.9%; SBI >10% | Yes strategic optionality |
| Late-August P/E | ~17.5-18.4x | ~18.1-18.4x | Very similar |
| Late-August P/B | ~2.1-2.2x | ~1.3x | Yes lower |
Rung 1: Yes Bank has largely solved the bad-loan emergency
This deserves more recognition than it often receives.
Q1 FY2027 GNPA was approximately 1.3%.
NNPA was only 0.2%.
Provision coverage reached 81.7%.
Gross slippages declined to approximately ₹964 crore from ₹1,458 crore a year earlier.
Retail slippages were reported at their lowest level in ten quarters.
These are not distressed-bank asset-quality numbers anymore.
Yes Bank now has slightly lower GNPA than Federal
Yes: 1.30%. Federal: 1.52%.
This is a striking reversal given Yes Bank's history.
The comparison changes at net NPA and coverage.
Federal's NNPA is marginally lower at 0.18%.
Federal also has stronger provision coverage at 87.37% excluding technical write-offs.
The broad conclusion is still important:
asset quality is no longer the main reason Yes Bank earns lower returns.
Federal Bank has moved beyond repair into optimisation
Its current focus is not cleaning a broken balance sheet. It is extracting more profit from a healthy one.
That difference appears immediately in core earnings.
Federal NII grew 26.1%.
Yes NII grew 17.5%.
Both are strong.
Federal generated the faster growth despite slower loan expansion because its margin economics improved more sharply.
Rung 2: the deposit franchises are now almost the same size
Federal deposits: ₹3.20 lakh crore.
Yes deposits: ₹3.15 lakh crore.
This is one of the most interesting comparisons in the article.
The banks have nearly identical liability scale.
Their profitability is not nearly identical.
That tells investors the difference sits in what management does with the deposits, not simply how many deposits each bank owns.
Yes Bank is growing deposits faster
Total deposits increased 14.3% versus Federal at 11.4%.
This matters because Yes advances increased even faster at 18.3%.
The bank needs sustained liability growth to fund that acceleration.
Federal also has a loan-deposit growth gap, but it is smaller in absolute funding intensity.
Federal has the stronger current CASA trajectory
Federal CASA balances grew 18.26% versus total deposits at 11.37%.
That improved CASA ratio to 32.23%.
Yes Bank's CASA ratio was slightly higher at 32.7%.
But the ratio was broadly stable year on year.
Federal therefore has the more favourable current mix shift.
Federal's NRI deposits give it a funding niche Yes does not replicate in the same way
Federal has more than ₹1.05 lakh crore of NR deposits.
This franchise was built over decades through Kerala's overseas-worker and NRI ecosystem.
Yes Bank has a broader corporate and urban retail identity.
Federal's liability niche can lower customer-acquisition friction in a segment where trust and remittance relationships matter.
Yes Bank's credit-deposit ratio has climbed to 90.5%
It was 87.4% a year earlier.
The increase reflects loan growth outrunning deposit growth.
A 90% ratio is not automatically dangerous.
It leaves less flexibility than a lower ratio if deposit competition suddenly intensifies.
Liquidity coverage remained strong at 138.5%, so this is a profitability and funding-cost issue rather than an immediate liquidity warning.
Rung 3: margin is where Federal creates the clearest gap
Federal NIM: 3.33%.
Yes Bank NIM: 2.70%.
The difference is 63 basis points.
Applied to roughly similar-sized deposit and loan franchises, that is economically significant.
Why does Yes Bank still earn a lower margin?
The post-reconstruction franchise still carries a different asset and liability mix from high-return private banks.
Factors include:
- A large wholesale and corporate franchise.
- Legacy priority-sector funding effects.
- Relatively expensive deposits.
- The need to rebuild granular retail relationships.
- Lower historical pricing power.
The margin is improving.
It has not yet reached Federal's economics.
Yes Bank's 2.7% margin is nevertheless moving in the right direction
NIM was 2.5% a year earlier.
Cost of deposits declined approximately 50 basis points year on year to 5.4%.
The bank also reduced balances associated with priority-sector-lending shortfall deposits.
These are structural improvements rather than treasury gains.
Federal has moved further along the same funding-cost path
Its cost of deposits declined 57 basis points to 5.21%.
That helped NIM expand 39 basis points year on year.
The difference between the banks is therefore not direction.
Both are improving.
Federal started from a stronger franchise and has progressed further.
Rung 4: operating efficiency still separates the banks materially
Federal cost-to-income: 52.5%.
Yes Bank: 62.8%.
A bank spending 63 paise to generate ₹1 of operating income has much less room left for provisions, taxes and equity returns than one spending 52-53 paise.
Yes has improved its cost ratio substantially
A year earlier cost-to-income was 67.1%.
Operating expenses increased only about 4% year on year while operating profit increased 25.5%.
This is operating leverage.
It is exactly the kind of progression a turnaround investor wants to see.
But 62.8% is still high.
Federal's own 52.5% ratio is not the finished product either
The bank remains more expensive operationally than the most efficient large private banks.
Federal has a smaller revenue base over which to spread:
- Technology spending.
- Branches.
- Compliance.
- Employee expense.
- Product infrastructure.
If revenue grows faster than expenses, cost-to-income can continue falling.
Rung 5: Federal converts the same-sized franchise into more shareholder profit
Federal ROA is 1.22% versus Yes Bank at 0.9%.
Federal ROE is 12.01% versus Yes around 8.3%.
This is the central investment difference.
Yes has largely repaired the loan book.
Federal currently makes more money from the balance sheet.
Why is Yes Bank ROE still below 10%?
Because the margin and cost structure have not yet fully normalised.
Low NPAs alone do not create high ROE.
A bank needs:
- Adequate NIM.
- Low operating cost.
- Fee income.
- Efficient capital usage.
- Low credit cost.
Yes has improved several of these.
The combination is not yet producing Federal-like returns.
Yes Bank is growing faster precisely because it needs more operating leverage
Advances grew 18.3% versus Federal at 14.9%.
If that growth occurs without deteriorating credit quality, Yes can spread its fixed operating infrastructure across a larger earning-asset base.
This is one route toward higher ROA.
The danger is chasing loan growth before the liability franchise is ready.
Retail disbursement growth adds another lever
Yes reported retail-asset disbursement growth of approximately 27.5%.
Retail loans can improve yields and granularity.
They also require disciplined collections and underwriting.
The strongest evidence so far is that retail slippages have been falling even while disbursements accelerate.
SMBC changes the Yes Bank story—but not in the simplistic way
Sumitomo Mitsui Banking Corporation now owns approximately 24.9% of Yes Bank and is its single largest shareholder.
SBI remains another major shareholder with more than 10%.
SMBC is one of Japan's largest banking groups and a globally systemically important bank through the wider SMFG group.
The strategic value is not simply that a famous foreign bank owns shares.
There are four plausible ways SMBC can improve Yes Bank economics
Business
- Japanese corporate relationships.
- Cross-border transaction banking.
- Foreign-currency business.
- Global corporate introductions.
Institutional capability
- Risk-management practices.
- Governance processes.
- International treasury expertise.
- Brand and rating support.
SMBC ownership does not automatically make Yes Bank a high-ROA bank
Strategic parentage is an input. ROA is an output.
Investors still need to see:
- Higher NIM.
- Lower cost-to-income.
- Growing current-account relationships.
- Cross-border fee income.
- Higher ROE.
If these numbers do not move, the strategic narrative is not creating enough economic value.
The rating agencies are already giving SMBC some credit
Yes Bank received multiple rating upgrades during the quarter.
Domestic rating agencies improved long-term ratings.
S&P Global assigned an international rating.
CRISIL later incorporated expected SMBC support more explicitly into its analytical approach.
This can eventually lower funding costs.
Lower funding costs would feed directly into the exact metric Yes needs to improve most: NIM.
Vinay Tonse's first full quarter begins a new management phase
Vinay Tonse took over as MD & CEO on April 6, 2026.
Q1 FY2027 is therefore effectively the first quarter of the new leadership era.
The mandate is very different from the immediate post-2020 reconstruction period.
The bank no longer needs to prove it can survive.
It needs to prove it can compound.
The new CEO inherits a much healthier starting point
GNPA is 1.3%.
NNPA is 0.2%.
CET1 is around 14%.
SMBC is the largest shareholder.
Loans are growing 18%.
Deposits are growing 14%.
The challenge is to convert those foundations into double-digit ROE without restarting the risk problems that historically damaged the franchise.
A current August funding episode shows why even stronger banks must remain price disciplined
Both Federal Bank and Yes Bank explored dollar-denominated debt issuance and ultimately stepped away when market pricing became unattractive.
This is not a negative unique to either bank.
It is evidence that management teams sometimes create more shareholder value by refusing expensive funding than by completing a flashy overseas issue.
Funding quantity matters.
Funding price matters more.
Federal and Yes Bank now trade at almost the same P/E
Fresh late-August market sources put Federal around 17.5-18.4x trailing earnings and Yes Bank around 18.1-18.4x.
This is an unusual result.
Federal currently earns materially higher ROA and ROE.
Why would the P/E multiples be similar?
Because investors expect faster future earnings improvement from Yes.
Price-to-book tells the story much more clearly
Federal trades around 2.1-2.2x book.
Yes Bank around 1.3x.
Federal earns about 12% ROE.
Yes earns around 8%.
The market therefore assigns each rupee of Federal book equity more value because Federal currently converts it into more profit.
Yes Bank does not look obviously cheap simply because P/B is lower
A low-return bank should trade at a lower book multiple than a high-return bank.
The valuation becomes attractive only if future ROE rises materially while the starting book multiple remains moderate.
The Yes Bank rerating case therefore depends on a sequence:
2.7% NIM → better cost efficiency → 1%+ ROA → double-digit ROE → higher justified P/B.
Skipping the operating steps and jumping directly to "SMBC means rerating" is weak analysis.
Federal's valuation has the opposite risk
The market already rewarded the improvement.
Bull Run's August 25 snapshot shows Federal up approximately 78% over one year.
Yes Bank was up about 15%.
Federal therefore has more current quality but also more quality already embedded in the share price.
Federal Bank vs Yes Bank: stock-market context
| Bull Run Market Snapshot — 25 Aug 2026 | Federal Bank | Yes Bank |
|---|---|---|
| Price | ₹346.95 | ₹22.50 |
| Market capitalisation | ₹80,857 Cr | ₹74,041 Cr |
| 1-month return | -2.07% | -1.96% |
| 3-month return | +20.09% | -1.14% |
| 6-month return | +15.84% | +6.94% |
| 1-year return | +77.91% | +15.09% |
| 52-week high | ₹371.70 | ₹25.78 |
| 52-week low | ₹188.40 | ₹17.20 |
| Bull Run Score | 43.9/100 | 39.7/100 |
The Federal Bank bull case is becoming simpler
What must continue
- CASA growth above deposit growth.
- NIM around current levels.
- Fee income growth above 15%.
- NNPA below 0.3%.
- ROA rising toward 1.4%+.
What could break the thesis
- Higher-yield loan segments create slippages.
- Deposit competition reverses funding gains.
- ROA stalls while P/B stays above 2x.
- Operating costs remain too high.
The Yes Bank bull case requires more moving parts
What must happen
- NIM approaches 3%.
- Cost-to-income moves toward the mid-50s.
- Loan growth remains high-teens.
- CASA keeps pace with assets.
- SMBC synergies become measurable.
- ROA moves sustainably above 1%.
- ROE reaches double digits.
What could derail it
- Loans continue outrunning deposits.
- Funding becomes more expensive.
- Retail growth increases slippages.
- Cost ratio stops improving.
- SMBC remains strategically valuable but economically invisible.
Federal Bank vs Yes Bank: current conclusion
Federal Bank currently has the better banking economics.
Its NIM is wider.
Cost structure is leaner.
ROA is higher.
ROE is higher.
CASA is improving more quickly.
Yes Bank currently has the more interesting unfinished transformation.
Asset quality has already been repaired to a level comparable with strong private banks.
Loans and deposits are accelerating.
SMBC adds strategic and governance depth.
Federal Bank vs Yes Bank FAQs
Which bank is larger?
They are surprisingly close. Federal had approximately ₹3.20 lakh crore of deposits and ₹2.81 lakh crore of gross advances, while Yes Bank had approximately ₹3.15 lakh crore of deposits and ₹2.85 lakh crore of net advances.
Which bank is growing faster?
Yes Bank currently. Advances grew approximately 18.3% and deposits 14.3%, versus Federal Bank at 14.9% and 11.4% respectively.
Which has the higher NIM?
Federal Bank at 3.33% versus Yes Bank at 2.7%.
Which has better asset quality?
It is close. Yes has lower GNPA at 1.3%, while Federal has slightly lower NNPA at 0.18% and stronger provision coverage.
Which has higher ROA?
Federal Bank at 1.22% versus Yes Bank at approximately 0.9%.
Which has higher ROE?
Federal Bank at 12.01% versus Yes Bank around 8.3%.
Who owns the largest stake in Yes Bank?
Sumitomo Mitsui Banking Corporation, or SMBC, with approximately 24.9% ownership. SBI remains another major shareholder.
Does SMBC ownership guarantee Yes Bank will rerate?
No. It can improve governance, funding access, corporate relationships and strategic capability, but sustainable rerating ultimately requires higher NIM, ROA and ROE.
Which stock is cheaper on price-to-book?
Yes Bank, at roughly 1.3x book versus Federal Bank around 2.1-2.2x in late August 2026.
Where can investors check the Bull Run data?
Use the Federal Bank Bull Run stock page and Yes Bank stock page.
Research sources
Disclaimer
This article is educational and informational only. Federal Bank and Yes Bank disclose some metrics using different definitions, including gross versus net advances and credit-cost denominators. Direct ratios are therefore labelled rather than mechanically normalised where source definitions differ. SMBC's ownership of Yes Bank is a strategic factor, not a guarantee of future profitability or shareholder returns. Current asset quality is unusually strong across much of the banking sector and should not be assumed permanent through a full credit cycle. Market prices and valuation ratios change daily. Nothing here recommends buying, selling or holding Federal Bank, Yes Bank or any security. Bull Run is not a SEBI-registered Research Analyst or Investment Adviser.