Moody's upgrades Yes Bank rating to Ba2 citing improved credit profile

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Moody's Ratings on Friday upgraded Yes Bank's long-term foreign currency and local currency bank deposit ratings by a notch to Ba2, from Ba3, driven by a gradual improvement in the bank's credit profile.

The global rating agency has upgraded its Baseline Credit Assessment (BCA) to ba3 from b1, Moody's said in a statement.

The upgrade of Yes Bank's ratings and BCA is driven by a gradual improvement in the bank's credit profile including its capital and loan loss reserves, which will provide sufficient buffers against the bank's unseasoned asset risks and improving yet modest profitability and funding, it said.

"Yes Bank's Ba2 deposit ratings are one notch above its Ba3 BCA based on our expectation of a moderate likelihood of support from the Government of India (Baa3 stable) in times of need," it said.

The bank's gross non-performing loan (NPL) ratio declined to 1.6 per cent, as of March 2025, from 13.9 per cent in March 2022.

Reported provision coverage as a proportion of NPL increased to 80 per cent from 71 per cent during this period.

Despite these improvements, it said, Yes Bank's asset quality remains exposed to unseasoned risks associated with the rapid expansion in its retail and small and medium enterprise portfolios, its increased focus into higher-risk retail segments, and reliance on third-party sourcing channels.