CARE upgrades ratings on various Yes Bank debt instruments

By: |
November 10, 2020 6:42 PM

Likewise, Rs 8,900 crore tier II bonds and Rs 2,231 crore lower tier II bonds are upgraded to BBB ratings with stable outlook, Yes Bank said citing a release from CARE. The ratings on Rs 904 crore upper tier II bonds and Rs 82 crore perpetual bonds have been revised to CARE D with stable outlook.

The rating on Rs 3,600 crore additional tier I bonds is withdrawn as the bank had written down the instrument as a part of restructuring of liabilities, CARE said.The rating on Rs 3,600 crore additional tier I bonds is withdrawn as the bank had written down the instrument as a part of restructuring of liabilities, CARE said.

Yes Bank on Tuesday said CARE has upgraded ratings on its various debt instruments following improvement in bank’s credit profile after the reconstruction plan. It has revised the rating on Rs 5,000 crore infrastructure bonds from CARE B to BBB and removed the bonds from ‘under credit watch’ with developing implications, while the outlook is stable.

Likewise, Rs 8,900 crore tier II bonds and Rs 2,231 crore lower tier II bonds are upgraded to BBB ratings with stable outlook, Yes Bank said citing a release from CARE. The ratings on Rs 904 crore upper tier II bonds and Rs 82 crore perpetual bonds have been revised to CARE D with stable outlook.

The rating on Rs 3,600 crore additional tier I bonds is withdrawn as the bank had written down the instrument as a part of restructuring of liabilities, CARE said.

“The revision in the ratings assigned to the debt instruments of Yes Bank Limited (YBL) factors in the improvement in the credit profile of the bank post the implementation of the reconstruction scheme announced by the Reserve Bank of India (RBI) and approved by Government of India (GOI) from March, 2020,” CARE said.

The reconstruction scheme for YBL has brought about strong systemic support to the bank by various market participants including GOI, RBI and SBI acting in order to protect the depositors’ money by way of providing capital support, liquidity support and reconstitution of the board of directors for better governance, it added.

A sustained growth in deposit base, sustained improvement in profitability along with increase in scale of business and improvement in asset quality and resolution of stressed accounts are among the positive factors that can lead to an upgrade in outlook to positive, the ratings agency said.

However, deterioration in asset quality parameters from existing levels on account of incremental slippages and moderation in capitalisation cushion on account of higher credit costs are the key negative factors that may trigger change in outlook to negative.

CARE acknowledged that the bank has been taking measures to improve its operating profitability by improving its non-interest income and control its operating cost.

However, decline in scale of business and heightened credit costs on account of provision for NPAs and COVID-19 related provision on standard assets has impacted the overall profitability of the bank.

Bank’s cumulative COVID-19 related provision amounted to Rs 1,918 crore as on September 30, 2020.

Yes Bank’s deposit base witnessed a reduction of 53.71 per cent from Rs 2,27,610 crore as on March 31, 2019 to Rs 105,364 crore as at March-end 2020 leading to a significant decline in the scale of the bank.

Post the reconstruction of the bank including capital raise, the bank has been able to tide over the redemption and also been able to generate deposits resulting in total deposits increasing to Rs 1,35,815 crore by September 2020.
Advances declined by 23.64 per cent to Rs 1,71,443 crore as on March 31, 2020 and further to Rs 1,66,923 crore as on September 30.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Banks in India to see capital decline over 2 years without fresh infusion: Moody’s
2Why traditional banks need to partner with fintech firms for delivering essential banking solutions
3Paytm to not charge any fee on wallet payments for merchants; move to benefit 1.70 crore users