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CARE revises outlook of YES Bank to positive from stable

The revision in the outlook to ‘Positive’ from ‘Stable’ is on account of stabilisation in operations and deposit base post the implementation of the reconstruction scheme and expectation of continued stable growth in deposits and advances with improvement in overall business and financial risk profile, Care Ratings said.

October 07, 2021 / 06:37 PM IST

YES Bank on October 7 announced that Care Ratings has revised the bank's outlook from stable to positive, the bank said in a release.

CARE Ratings in a note said the debt instruments of YES Bank Limited (YBL) continue to factor in the improvement in the credit profile of the bank post the implementation of the reconstruction scheme for the bank that was announced by the Reserve Bank of India (RBI) and approved by Government of India (GOI) from March, 2020.

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

The rating agency expects the ratings to remain constrained on account of weak asset quality parameters due to concentrated exposure to certain stressed asset groups including slippages which were witnessed in the retail and MSME advances due to the impact of COVID-19 pandemic.

YES Bank has also increased its provision coverage ratio (66.83 percent as on June 30, 2021) leading to elevated credit costs and moderate profitability.


CARE rating in the note said the bank expects recovery to be higher than the expected slippages in the near term, but, the proportion of stressed advances to the net worth remains relatively high for the bank and higher than expected slippages may impact financial profile of the bank.

The bank has seen improvement in the deposits, the proportion of bulk deposits continues to remain high leading to depositor concentration, it added.

CARE Ratings said the ratings may be upgraded if the bank demonstrates continued business growth with improvement in profitability and maintaining adequate capitalisation, it said.

The ratings agency also said that it may revise the rating to 'stable' if the bank witnesses higher slippages than the recoveries expected leading to higher credit costs impacting profitability.

YES Bank saw a nine percent annual growth in the net interest income (NII) during FY21 with a decline of 35 percent in interest expenses, the bank's non-interest income (adjusted for profit on AT1 bonds written off) decreased by 3 percent due to lower fee income and corporate cash management income.

Due to higher provisioning for NPA largely in the retail segment, the bank reported net loss of Rs 3,462 crore for FY21. The bank in the first quarter of FY22 reported net profit of Rs 207 crore on total income of Rs 5,582 crore.
Moneycontrol News
Tags: #Yes Bank
first published: Oct 7, 2021 06:37 pm

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