After rating agency CARE improved the bank’s ratings assigned to its debt instruments including as Infrastructure Bonds and Tier II Bonds, among others, Yes Bank‘s shares soared over 10%, hitting a 52-week high of 16 apiece on the BSE in Thursday’s opening trades.
“The revision in ratings assigned to Yes Bank’s debt instruments factors in the bank’s continued demonstration of stabilisation of operations and growth in business, i.e. advances as well as deposits, with strong growth in CASA deposits and continued improvement in profitability during 9MFY22 with stable asset quality parameters amidst concerns over Covid-19 related stress,” according to CARE.
Furthermore, the ratings continue to take into account the bank’s improved credit profile following the implementation of the bank’s reconstruction scheme and the subsequent capital raise through a Follow-on Public Offer (FPO) in July 2020, which increased the bank’s capitalisation level and increased its ability to absorb asset quality shocks as well as provide growth capital.
“In the near term, the bank expects the recovery to be higher than expected slippages,” CARE Ratings added. “However, the proportion of stressed advances to net worth remained relatively higher for the bank, and higher than expected slippages may further impact the bank’s financial risk profile and would continue to be a key monitorable.”
The bank released its Q4 business update earlier this week, stating that net advances increased by 8.8% to 181,508 crore, while deposits increased by 21% to 197,281 crore. As of March 31, 2022, the credit-to-deposit ratio was 92 percent, down from 102.4 percent a year before.
