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Moody's Investors Service Inc.

Moody's Upgrades Yes Bank's Ratings, Outlines Stability

Strategic Insights

— 2 min read

Moody's Investors Service has upgraded Yes Bank's long-term foreign and local currency bank deposit ratings to Ba2 from Ba3, along with its Baseline Credit Assessment (BCA) and adjusted BCA to ba3 from b1. The upgrades are driven by a gradual improvement in the bank's credit profile, including its capital and loan loss reserves, modest profitability, and improving funding. Yes Bank's ratings reflect the expectation of moderate support from the Government of India (Baa3 stable) in times of need.

Key Takeaways:

  • Yes Bank's long-term foreign and local currency bank deposit ratings have been upgraded to Ba2 from Ba3 by Moody's Investors Service.
  • The upgrades are driven by a gradual improvement in the bank's credit profile, including its capital and loan loss reserves, modest profitability, and improving funding.
  • Yes Bank's Baseline Credit Assessment (BCA) has been upgraded to ba3 from b1, reflecting the bank's improving asset quality and capitalization.
  • The bank's gross non-performing loan (NPL) ratio has declined to 1.6% as of March 2025 from 13.9% in March 2022, with reported provision coverage as a proportion of NPL increasing to 80% from 71% during this period.
  • Yes Bank's Common Equity Tier 1 (CET1) capital ratio on a standalone basis improved to 13.5% as of the end of March 2025 from 12.2% a year earlier.
  • Sumitomo Mitsui Banking Corporation (SMBC) has announced plans to acquire a 20% stake in Yes Bank, which is expected to bring in a long-term strategic partner with a strong balance sheet and funding capacity to support Yes Bank's growth.
  • Yes Bank's efforts to reduce deposit costs and increase lending to high-yielding retail and small and medium enterprise segments are expected to maintain net interest margins despite significant policy rate declines in India.
  • The bank's funding has gradually improved, with a higher share of low-cost current and savings deposits and retail term deposits, increasing to 51% of total deposits at the end of March 2025 from 41% as of March 2021.

Statistics:

  • Gross non-performing loan (NPL) ratio: 1.6% (as of March 2025), down from 13.9% (March 2022)
  • Provision coverage as a proportion of NPL: 80% (as of March 2025), up from 71% (March 2022)
  • Common Equity Tier 1 (CET1) capital ratio: 13.5% (as of March 2025), up from 12.2% (March 2024)
  • Share of low-cost current and savings deposits and retail term deposits: 51% (as of March 2025), up from 41% (March 2021)
  • Yes Bank's consolidated assets: INR4,241 billion ($49.6 billion) (as of 31 March 2025)

Sources:

  • Moody's Investors Service news release: [Moody's Ratings]
  • Moody's Rating Methodology: [Banks published in November 2024]
  • Yes Bank Limited's "Assigned BCA" score and financial profile: [Rating Methodologies page on https://ratings.moodys.com]

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