Yes Bank Share Explainer: SMBC has bought 20% stake in Yes Bank, but why is the stock not moving

News Topical, Digital Desk : The market had expected significant changes with the entry of Japanese giant SMBC-Sumitomo Mitsui Banking Corporation into Yes Bank, but the stock did not show the same enthusiasm. Despite the 20% stake deal, the stock remained stuck in a narrow range. This deal also received approval from the Reserve Bank of India (RBI). It was believed that this would provide Yes Bank with Japanese banking experience, better governance, and long-term stability. However, the stock did not see the rise that the market had hoped for. According to experts, the biggest reason for this is the slow pace of improvement in the bank's profitability. Until profit and return ratios strengthen, re-rating of the stock is considered difficult.

According to market experts, investors' biggest disappointment is the slow improvement in profitability. In Q2 FY26 results, the bank's NIM was around 2.4%, slightly lower than the previous quarter. Meanwhile, RoA is only 0.6%, and RoE is hovering around 5–6%. The bank is still not fully free from the burden of old AT-1 bonds, which are putting pressure on profits. Another major reason is that SMBC has made it clear that it will not increase its stake above 24.99%. This means that this deal is a strategic investment, but not a controlling stake. The RBI has also not granted SMBC promoter status. Consequently, the major management control changes that investors were expecting are currently unforeseen. Rumors have been another major reason for the volatility in Yes Bank's stock. During May-June 2025, rumors circulated in the market that SMBC might acquire a 51% controlling stake in the bank. These reports sent the stock soaring by nearly 44%. However, upon an official denial, the stock fell by nearly 10%, denting investor confidence. On the valuation front, Yes Bank trades at approximately 1.2x P/B. This doesn't seem overly expensive at first glance, but profit recovery since the 2020 crisis is still considered slow. Furthermore, the bank's CASA ratio is below 30%, which is considered a concern for any retail-focused bank. Another factor contributing to uncertainty is the ongoing disclosure investigation by SEBI. While this investigation is still in its initial stages, it has impacted stock sentiment in the short term. Looking ahead, experts believe that Yes Bank offers opportunities for long-term risk-takers. SMBC's board-level participation could gradually improve governance and strategy. However, in the short term, the stock may remain in a consolidation range of ₹20–25. Some brokerages, such as Motilal Oswal and Nirmal Bang, believe that if the stock breaks out strongly above ₹23.5, it could reach levels of ₹26–28. However, this view is currently considered a minority bullish view. The entry of a strong foreign bank like SMBC is certainly positive for Yes Bank, but the stock's true growth will only come when profits, NIM, and return ratios show clear and rapid improvement. Until then, investors will need to remain patient and cautious. Question 1: What is the SMBC deal and what is special about it? Sumitomo Mitsui Banking Corporation (SMBC), a major Japanese bank, has acquired a 20% stake in Yes Bank. It received Reserve Bank of India (RBI) approval in August 2025. The market expected this to provide Yes Bank with international banking experience, better governance, and strong support. 
 

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