Rating agency Moody's on Friday upgraded Yes Bank Ltd.'s long-term foreign currency and local currency bank deposit ratings, attributing to a gradual improvement in the bank's credit profile.
The agency has upgraded its Baseline Credit Assessment (BCA) by a notch to Ba2, from Ba3, it said in a statement.
"The upgrade of Yes Bank's ratings and BCA is driven by a gradual improvement in the bank's credit profile including its capital and loan loss reserves, which will provide sufficient buffers against the bank's unseasoned asset risks and improving yet modest profitability and funding," Moody's said.
"Yes Bank's Ba2 deposit ratings are one notch above its Ba3 BCA based on our expectation of a moderate likelihood of support from the Government of India (Baa3 stable) in times of need," it added.
The private lender's gross non-performing loan ratio declined to 1.6% in the period ending March 2025, from 13.9% in March 2022.
Reported provision coverage as a proportion of NPL increased to 80% from 71% during this period.
Despite these improvements, Moody's said, Yes Bank's asset quality remains exposed to unseasoned risks associated with the rapid expansion in its retail and small and medium enterprise portfolios, its increased focus on higher-risk retail segments, and its reliance on third-party sourcing channels.
Shares of Yes Bank closed 1.3% lower at Rs 20.16 apiece on the BSE, compared to a 0.7% fall in the benchmark Sensex.
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