The rating company had earlier changed the outlook for Yes Bank from ‘stable’ to ‘positive’.
“Moody’s has upgraded Yes Bank’s issuer rating from B3 to B2 as its funding and liquidity have improved significantly over the past year, which has strengthened depositor and credit confidence in the bank,” it said on Tuesday. said in a release.
This boosted Yes Bank’s Baseline Credit Assessment (BCA) and Adjusted BCA from ca2 to b3, which is an improvement of two places.
The change in outlook reflected Moody’s expectation of further improvement in the bank’s credit profile, driven by a clean-up of inherited stressed assets and/or improvement in its capital and profitability.
“The rating action also reflects the fact that despite significant economic challenges since the start of the pandemic, the asset quality of Yes Bank has deteriorated marginally, while its capital remains stable,” the rating agency said.
About a year and a half ago Moody’s Investors Service downgraded Yes Bank’s rating after the Reserve Bank of India imposed a 30-day moratorium that barred the lender from paying its creditors.
The bank had also gone through a management change with former co-founder Rana Kapoor now facing several legal charges.
After Indian regulators rescued the bank, Yes Bank deposits grew by over 65% between 30 September 2021 and 31 March 2020. Its deposit quality has also improved; Current and savings account and retail fixed deposits represent 45% of the total funding as on 30 September 2021, while it was only 31% as of 31 March 2020.
The bank has reduced its share of market funding, while its average liquidity coverage ratioLCR) increased to 118% as on 30 September 2021, from 40% as on 31 March 2020.
Moody’s said Yes Bank’s asset quality remains weak and risks to its profitability and capital remain.
Yes Bank shares closed at Rs 13.03 BSE Tuesday.