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The global rating agency Moody's Investors Service has retained the issuer ratings, deposit and unsecured debt of Yes Bank, which does not mean that the planned change of direction for the Next year will have an impact.
On September 19, Yes Bank confirmed that the Reserve Bank of India had reduced Rana Kapoor's mandate as CEO and CEO until January 31, 2019, even as shareholders requested a three-year extension. .
"The profitability of Yes Bank is strong and Moody's expects the bank to be able to maintain low credit costs over the next 12 to 18 months. This situation, combined with growth in interest and other income, will help Yes Bank maintain strong profitability, "said the global rating agency.
Kapoor's mandate was shortened after discrepancies were noted in Yes Bank's non-performing assets classification in relation to RBI's valuation.
Moody's confirmed rating of foreign currency issuers, the rating of foreign currency and local currency deposits and the unsecured MTN program rating of Baa3.
In the first quarter of fiscal 2018-19, Yes Bank grew 31% to Rs. 1,260.4 million. Its gross non-performing assets (NPA) reached 1.31% against 1.28% in the previous quarter, although the net NPA is less than 0.59% against 0.64% sequentially.
Financial stability
Moody's rating takes into account the improved financing of Yes Bank, the superior quality of assets compared to other rated Indian banks that focus on business loans and strong profitability. "However, these strengths are outweighed by the rapid expansion of the bank's assets, which presents risks to its credit profile," the report adds.
The bank's financing structure has improved considerably with the growth of current accounts and savings accounts (CASAs) and term deposits, which means that its liabilities are added to more sticky and granular levels. . This reduces the reliance of any bank on trust-sensitive wholesale financing.
The agency expects Yes Bank 's loan growth of 35 to 40% per annum to continue to exceed the industry average of about 10% over the course of the year. Next 12 to 18 months.
The capitalization of the bank is adequate, but to maintain current levels, the bank will have to raise capital in the market, given the expansion of its balance sheet. If Yes Bank has trouble raising external capital, it will prevent the bank from developing its loan portfolio, said Moody's note.
What could improve the rating?
The upward pressure on the ratings of the bank and BCA could develop if:
1. Yes Bank maintains its current asset quality ratios while reducing its concentration of credit risk
2. The bank's financing profile improves, for example by increasing its proportion of CASA / total deposits to align this ratio with the industry average, without weakening its net profit margin. interests
3. The bank maintains profitability and maintains adequate buffers to absorb losses.
What could lower the rating?
Downward pressure on the bank's CBAs and rating could develop if:
1. long-term deterioration of impaired loans or loan loss reserves
2. the rate of formation of new NPAs is significantly higher than previously; or the bank shows a decline in profits, which would lead to a significant decrease in the generation of internal capital.
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