Yes Bank: CARE upgrades bank's debt instruments rating, revises outlook to 'positive'

Moody's changes India's rating outlook to stable from negative; affirms Baa3 rating

The ratings also factor in the steady growth in deposit base witnessed by the bank, the shift towards retail lending and granularization of advances profile and improvement in the liquidity profile of the bank.

The ratings continue to remain constrained on account of weak asset quality parameters due to concentrated exposure to certain stressed corporate groups as well as slippages witnessed in the retail and MSME advances on account COVID-19 induced lockdowns. While the bank has been provisioning to increase its provision coverage (stood at 66.83 percent as of June 30, 2021)

which has kept the credit costs elevated and profitability moderate, it said.

The bank expects the recovery to be higher than the expected slippages in the near term, however, the proportion of stressed advances to the net worth remained relatively higher for the bank and higher than expected slippages may further impact the financial risk profile of the bank and would continue to remain a key monitorable, the rating agency said.

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Further, while the bank has seen improvement in the deposits, the proportion of bulk deposits continues to remain high leading to depositor concentration.

CARE Ratings has withdrawn the rating assigned to the Perpetual Bonds (Basel II) of Rs 82 crore, Upper Tier II Bonds (Basel II) of Rs 200 crore and Lower Tier II Bonds (Basel II) of Rs 627.90 with immediate effect, as the company has made payment of principal and interest in full and there is no amount outstanding under the issue as on date.