Global credit rating agency Moody’s Ratings has 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 credit profile.
Key Factors Behind the Upgrade
- Improved Credit Profile: Moody’s highlighted better capital adequacy and strengthened loss-absorption buffers as key reasons for the upgrade.
- Lower NPAs: Yes Bank’s gross non-performing loan (NPL) ratio dropped to 1.6% in March 2025, a significant improvement from 13.9% in March 2022.
- Stronger Provisioning: The bank’s provision coverage ratio increased to 80% from 71%, reflecting better asset quality buffers.
- Government Support Expectation: Moody’s noted that Yes Bank’s Ba2 deposit ratings are one notch above its Baseline Credit Assessment (BCA) of ba3, based on the expectation of moderate systemic support from the Government of India.
Market Reaction & Future Outlook
- Stock Performance: Yes Bank’s shares closed 0.88% lower at ₹20.24 on the National Stock Exchange following the announcement.
- Challenges Ahead: Despite improvements, Moody’s cautioned that Yes Bank remains exposed to unseasoned risks due to its rapid expansion into retail and SME lending.
With stronger financial buffers and improved asset quality, Yes Bank’s credit profile continues to strengthen, positioning it for sustained growth.
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