CRISIL, Ind-Ra upgrade Yes Bank's ratings on improvement in funding, liquidity profile

Rating agencies CRISIL and India Ratings (Ind-Ra) have upgraded Yes Bank's infrastructure bonds and other papers on the back of improvement in its funding and liquidity profile recently.

CRISIL upgraded the bank's rating on Rs 20,000 crore certificates of deposit to A2-plus from A2 besides reaffirming its BBB/Stable rating on the private lender's tier two bonds under Basel III and infrastructure bonds.

Ind-Ra on the other hand also revised upwards the bank's long-term issuer rating to BBB from BB-(minus) while resolving the rating watch evolving.

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Explaining the rating action, CRISIL said the "upgrade in short-term rating reflects an improvement in funding and liquidity profile of the bank with a gradual increase in its deposit base as well as sizeable capital raised recently".

With this, Yes Bank has paid back Rs 35,000 crore out of the Rs 50,000 crore special liquidity facility it availed from the RBI in March 2020, which is ahead of its earlier plan.

Moreover, the lender's liquidity coverage ratio (LCR) has also improved in recent months. It stands at 114.1% as of June 2020, as compared to 37% in March 2020.

As of June 2020, Yes Bank has total deposits of Rs 1.17 lakh crore, as against Rs 1.05 lakh crore as on March 31, 2020. Furthermore, the bank has also raised Rs 15,000 crore via a follow-on public offer (FPO) in July 2020, improving its capital position substantially.

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CRISIL added that the ratings continue to be supported by the expectation of further extraordinary systemic support from key stakeholders and substantial ownership by the State Bank of India (SBI), which will play a major role in Yes Bank's credit rating in the future.

Meanwhile, Ind-Ra also said that multi-notch upward revision and the resolution of rating watch manifest considerable progress in the bank's profile as well as operating metrics after its reconstruction in March (2020).

The agency expects Yes Bank to continue to better its operating metrics and liability profile over the next few quarters as it continues to make provisions for coronavirus-related impact on its portfolio.