India Ratings upgrades Yes Bank's LT rating to 'AA-' with 'stable' outlook

Yes Bank (YBL) said that India Ratings and Research has upgraded the bank's long-term issuer rating to 'IND AA-' from 'IND A' with 'stable' outlook.

India Ratings and Research stated that the rating upgrade factors in an improvement in the consolidated profitability in 1Q FY26 due to a material reduction in RIDF exposure to 9% (FY22: 11.5%) and a target of 5% by FY27, leading to improved net interest margins (NIMs).

The increased focus on retail and SME in the loan mix to around 60% in FY25 (FY20: 36%) indicates a shift away from corporate lending, resulting in sustainable improvement in return on assets (ROA).

Furthermore, the upgrade also reflects the banks improved asset quality, minimal provisioning for legacy stressed assets (net non-performing assets + net security receipts +net restructured assets), and ongoing enhancement in the deposit profile.

Moreover, the bank maintains an adequate capital position, with a capital adequacy ratio of 16.2% and Tier-I capital at 14%, backed by internal accruals which are sufficient for 11%-12% growth in advances over the near to medium term.

India Ratings also considers the proposed acquisition of a 20% stake by Sumitomo Mitsui Banking Corporation in YBL, expected to enhance the banks strategic direction and governance framework.

The ratings also factor in YBLs investments in low-yielding RIDF deposits due to priority sector lending (PSL) shortfalls and elevated cost-to-income ratio over several fiscals.

Yes Bank is a full-service commercial bank, providing a complete range of products, services and digital offerings, to corporate, micro, small and medium enterprises and retail customers. As of June 2025, the bank had a network of over 1,253 branches and 1330 ATMs, with deposits of Rs 2.75 trillion, net advances of Rs 2.41 trillion and total assets of INR4.1 trillion.

The bank reported 59.43% surge in net profit to Rs 801.07 crore while total income rose 4.82% to Rs 9,348.11 crore in Q1 June 2025 over Q1 June 2024.

The scrip was up 0.05% to currently trade at Rs 19.36 on the BSE.

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