Yes Bank Shares Climb 7% As Moody's Outlook Upgrade Takes Note Of Healthy Performance

Shares of Yes Bank were gaining sharply on Thursday after ratings agency Moody’s took a more favourable stance on the private lender’s performance.

What Happened: Moody’s Ratings raised its outlook on the bank from stable to positive, indicating expected gradual improvements in the bank’s performance. It also affirmed Yes Bank’s long-term foreign currency and local currency deposit rating, along with its long-term foreign currency issuer rating at “Ba3”.

Moody’s highlighted that improvements in Yes Bank’s deposits and lending franchise should bolster profitability over the next 12-18 months. The agency also suggested a potential rating upgrade if the bank sustains core profitability with stable asset quality.

For the first time in eight quarters, Yes Bank saw a sequential decline in deposit growth in the June quarter, though it grew 21% year on year to ₹2.64 lakh crore. Despite this, the bank’s loan growth, while below industry levels, was the best in 21 quarters on a year-on-year basis.

Yes Bank’s advances grew 14.8% from the previous year and 0.9% from the March quarter while its liquidity coverage ratio for the June quarter improved to 137.8% from 127% year-on-year.

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Meanwhile, there have been reports of a large stake sale at the bank that could see a change in majority ownership, though the lender has so far denied the reports. However, its biggest shareholder, State Bank of India, has been reportedly looking to offload its entire 24% stake.

First Abu Dhabi Bank is among potential suitors for a $5 billion (₹41,750 crore) stake in Yes Bank, according to an Economic Times report that cited sources.

The Middle Eastern lender is considering a bid for up to a 51% stake in Yes Bank. The stake sale has also attracted preliminary interest from Japan, including Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group, though their commitment levels remain unclear, the business daily reported.

The size of the stake sale could change, and the banks may decide against pursuing a deal or explore other investment options.

Price Action: Yes Bank’s share price was up nearly 7% at ₹26.70 in morning trade on Thursday. The stock has gained nearly 18% so far this year, outperforming banking peers like HDFC Bank and Kotak Mahindra Bank.

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