Global rating agency Moody’s on Friday increased the rating of Yes Bank in the private sector. The rating agency has increased the long -term foreign exchange and local currency bank deposit rating from BA3 to BA2. According to PTI news, the rating agency Moody’s said in a statement that the global rating agency has increased its Baseline Credit Assessment (BCA) from B1 to BA3. With this, the bank is expected to get market support in the coming days.
Rating ratings due to gradual improvement in credit profiles
According to the news, the improvement in YES Bank’s rating and baseline credit assessment is due to gradual improvement in bank’s credit profiles, including its capital and debt loss reserves, which will provide adequate buffer against the bank’s unexpected asset risks and improves slight profitability and funding. Yes Bank’s BA2 deposit rating is one notch above its BA3 BCA, which is based on our expectation of moderate probability of support from the Government of India (BAA3 stable) at the time of need.
Reduction in NPL ratio
By March 2025, the bank’s gross non-performing loan (NPL) ratio declined to 1.6 percent, which was 13.9 percent in March 2022. During this period, the provision reported as a ratio of NPL increased from 71 percent to 80 percent. Despite these reforms, it stated that the asset quality of Yes Bank is exposed to rapid expansion in its retail and small and medium enterprise portfolio, its growing focus in high -risk retail areas and unexpected risks associated with the third -party sourcing channels.
Approval to raise Rs 16,000 crore
Yes Bank recently stated that its board has approved raising Rs 16,000 crore through a mixture of equity and loan to increase business. In the regulatory filing, the bank said that the board has approved raising funds by issuing eligible equity securities through various acceptable means, provided that the total amount raised by issuing such securities should not exceed Rs 7,500 crore and resulted in a total weakening of more than 10 percent.
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