Yes Bank's Outlook Upgraded To Positive By India Ratings
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India Ratings and Research (Ind-Ra) has revised the outlook for Yes Bank from Stable to Positive while retaining the ‘IND A’ rating.

What Happened: The announcement was made late on Friday. The rating agency cited the bank's improved deposit profile, better asset quality metrics, and an increasing share of small and medium enterprises (SME) and retail portfolios as reasons for the positive revision.

The bank’s profitability, however, remains modest due to lower net interest margins and a high cost-to-income ratio. The agency expects Yes Bank's profitability profile to gradually improve but remain modest in the medium term owing to continued low net interest margins with a high cost-to-income ratio.

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The rating agency said that Yes Bank, like most other banks, witnessed a significant improvement in its asset quality and recoveries as the impact of COVID-19 waned off and the overall macroeconomic situation along with the operating environment for banks improved.

The bank has also seen a reduction in its special mention account (SMA) portfolio, restructured portfolio, and stress corporate exposure. The bank has demonstrated sustained growth momentum in the retail and SME portfolio, which now constitutes 61.6% of the total loan portfolio in FY24.

This positive revision by Ind-Ra follows a series of similar upgrades by other rating agencies. In July 2024, ICRA upgraded Yes Bank’s ratings, attributing it to the bank's steady operational growth, improving loan mix, and a consistent decline in stressed assets.

Earlier this week, CRISIL upgraded the long-term rating of Yes Bank from ‘CRISIL A/Positive' to ‘CRISIL A+/Stable', citing the bank's focus on building granularity on both the assets and liabilities side and maintaining comfortable capitalisation levels.

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