Moody’s, the rating agency, has updated private lender Yes Bank’s rating from B3 to B2 and revised the outlook to positive from stable. The agency said the upgrade indicates Moody’s expectation of additionally advancing the Bank’s credit profile, encouraged by a cleanup of legacy stressed assets and enhancements to its capital and profitability.
Moody’s moreover stated that Yes Bank’s funding and liquidity have considerably developed in the prior year, encouraging depositor and credit confidence in the Bank. The rating performance also reveals the reality that despite the vital economic difficulties due to the COVID-19 pandemic, Moody’s said, adding that Yes Bank’s asset quality has depreciated only simply while its capital has prevailed steady.
The rating agency has also reduced the government support assumption for Yes Bank from moderate to high, resulting in a one-notch improvement to the B2 issuer class from the b3 BCA. The support assumption is at par with the support required for private sector banks in India.
Yes Bank, has recorded a net profit of ₹225 crores in the September quarter in comparison to ₹129 crores in the year-earlier quarter. Possible prospects from now on involve Yes Bank’s asset quality, said Moody’s, as stressed assets remain to feign perils to its profitability and capital.
On the asset quality front, the gross non-performing asset (NPA) ratio dropped to 15% in the September quarter vs 15.6% in the June quarter, and the net NPA ratio also dropped to 5.5% vs 5.8% last quarter.
After the results, Yes Bank’s CEO said the lender will have no non-performing asset after transferring its complete poor loan book to the asset reconstruction company (ARC) by March 2022 end. Net interest income in the September quarter ended September fell 23% to ₹1,512 crores from ₹1,973 crores a year ago.
The Bank’s loan book displayed indications of heightened tension in the second quarter because of the higher restructuring of MSME loans and the second wave of the COVID-19 pandemic. The restructured book developed by 24% to ₹6,184 crore from ₹4,976 crores a quarter ago.