CRISIL Elevates YES Bank's Long-Term Rating To A+/Stable, Citing Granular Lending Focus
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CRISIL Ratings has upgraded the long-term rating of YES Bank from ‘CRISIL A/Positive’ to ‘CRISIL A+/Stable’.

What Happened: CRISIL’s decision to upgrade YES Bank’s rating was influenced by the bank’s continued focus on building granularity on both the assets and liabilities side and maintaining comfortable capitalisation levels. The rating agency also reaffirmed the short-term rating on the bank’s Certificate of Deposits at ‘CRISIL A1+’.

CRISIL observed that YES Bank has shifted its business model towards more granular lending, with loans to retail and small and medium enterprises (SMEs) constituting about 60% of the net advances. The bank’s total deposits have seen a significant increase, reaching ₹2.65 lakh crore as of June 30, 2024, from ₹1.63 lakh crore as of March 31, 2021.

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The bank’s capitalisation remains robust, with a common equity Tier I (CET1) ratio and overall capital adequacy ratio (CAR) of 13.3% and 16.5% respectively, as of June 30, 2024. Despite constraints from investments in priority sector lending (PSL) assets, industry-wide pressure on funding costs, and higher operating expenses, the bank’s profitability trend is improving, as highlighted by CRISIL.

This rating upgrade comes on the heels of a similar action by ICRA in July 2024, which also cited YES Bank’s consistent operational growth and a decrease in stressed assets as reasons for the upgrade.

Earlier in the month, reports suggested that the State Bank of India is planning to sell its 24% stake in YES Bank by March 2025, with Japanese lender Sumitomo Mitsui Banking Corp and Dubai-based Emirates NBD reportedly in advanced talks to acquire a majority stake. This potential change in ownership could further impact YES Bank’s operational and financial strategies.

Price Action: Yes Bank’s share price was 0.49% to trade at ₹24.57 in early trade on Thursday.

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