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Banks (Finance)

Moody's Upgrades Yes Bank's Credit Ratings on Gradual Improvement in Credit Profile

Strategic Insights

— 1 min read

Yes Bank, India's troubled private sector lender, has received a significant boost to its credit ratings from Moody's Ratings, a global credit rating agency. The upgrade is a result of a gradual improvement in Yes Bank's overall credit profile, driven by better capital adequacy and strengthened loss-absorption buffers. Moody's has upgraded Yes Bank's long-term foreign and local currency bank deposit ratings to Ba2 from Ba3, citing improved asset quality and reduced unseasoned asset risks.

Key Takeaways:

  • Moody's upgraded Yes Bank's long-term foreign and local currency bank deposit ratings to Ba2 from Ba3, citing a gradual improvement in the bank's overall credit profile.
  • The agency also raised Yes Bank's Baseline Credit Assessment (BCA) by one notch to ba3 from b1, reflecting better capital adequacy and strengthened loss-absorption buffers.
  • Yes Bank's gross non-performing loan (NPL) ratio dropped to 1.6% as of March 2025, a significant improvement from 13.9% recorded in March 2022.
  • Provision coverage as a proportion of NPLs improved to 80%, up from 71%, reflecting stronger asset quality buffers.
  • Despite the gains, Moody's noted that the bank remains exposed to "unseasoned risks" due to its rapid expansion into the retail and small and medium enterprise (SME) segments and increased focus on higher-risk retail lending.
  • The Ba2 deposit ratings are one notch above the bank's BCA of ba3, underpinned by the expectation of a moderate level of systemic support from the Government of India.
  • Yes Bank has undertaken a series of balance sheet clean-up and governance reforms since its reconstruction in 2020, following a Reserve Bank of India-led rescue plan backed by a consortium of Indian banks.

Statistics:

  • Yes Bank's NPL ratio dropped from 13.9% in March 2022 to 1.6% in March 2025.
  • Provision coverage as a proportion of NPLs improved from 71% to 80% over the same period.
  • Moody's expects a moderate level of systemic support from the Government of India, reflected in the bank's Ba2 deposit ratings.
  • Yes Bank's BCA was raised by one notch to ba3 from b1, reflecting better capital adequacy and strengthened loss-absorption buffers.

Sources:

  • PTI
  • Moody's Ratings
  • Reserve Bank of India (RBI)
  • Government of India
  • Times of India (for Reprint Rights)

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