Crisil upgrades Yes Bank's ratings to BBB-plus/stable
Sep 01, 2021
Mumbai (Maharashtra) [India], September 1 : Crisil Ratings has upgraded the rating on tier-II bonds (under Basel III) and infrastructure bonds of Yes Bank Ltd to BBB-plus/stable from BBB/stable.
It has also upgraded the rating on the Rs 20,000 crore certificates of deposit (CD) of the bank to A1 from A2-plus.
The upgrade in the rating reflects greater stability in the bank's deposit base in past few quarters post reconstruction of the bank in March 2020 as well as its adequate capitalisation.
Crisil said Yes Bank's total deposits increased to Rs 1.63 lakh crore as on June 30 from Rs 1.17 lakh crore as on June 30 last year and Rs 1.05 lakh crore as on March 31, 2020.
The proportion of granular and sticky current account and savings account (CASA) deposits to overall deposits has been on an improving trend and stood at 27.4 per cent as on June 30 as against 25.8 per cent as on June 30 last year.
Further, the bank's capital position is adequate, supported by the capital raise of Rs 15,000 crore though a follow-on public offer (FPO) in July 2020.
The common equity tier I (CET1) ratio and overall capital adequacy ratio (CAR) stood of 11.6 per cent and 17.9 per cent respectively as on June 30. Bank's average liquidity coverage ratio (LCR) also remains adequate at 132 per cent for the quarter ended June 30 as against the minimum regulatory requirement of 100 per cent.
Crisil said the ratings continue to be underpinned by the expectation of continued extraordinary systemic support from key stakeholders and sizeable ownership by the State Bank of India (SBI).
At the same time, the ability of the bank to continue to build a strong retail liabilities franchise and a stable and sound operating business model with strong compliance and governance framework over the medium term needs to be demonstrated.
Additionally, the bank's asset quality is weak and the impact of the shift in business model to focus on granular retail and micro, small and medium enterprises (MSME) segments and selective working capital loans in the corporate segment will need to be seen over a longer period.
These will be key rating monitorables, said Crisil. Given challenges in the macro-environment, ability of the bank to manage collections and asset quality will remain a key monitorable.
