comScore
Active Stocks
Thu Sep 28 2023 09:31:29
  1. Tata Steel share price
  2. 128.85 0.55%
  1. Mahindra & Mahindra share price
  2. 1,589.4 -0.05%
  1. NTPC share price
  2. 240.2 0.36%
  1. Power Grid Corporation Of India share price
  2. 199.45 0.08%
  1. Tata Motors share price
  2. 622.05 0.27%
Business News/ Companies / News/  India Ratings downgrades Yes Bank, shares shrug off concern
Back

India Ratings downgrades Yes Bank, shares shrug off concern

Delay in capital raising and uncertainty regarding the quantum, lower current account deposits, have been the main reasons that triggered the downgrade, Ind-Ra said
  • The downgrade reflects the inadequate progress with respect to the quantum and pace of equity infusions
  • Some of the bank’s corporate exposure spread over multiple sectors has witnessed rapid credit migration over the last few quarters (Reuters)Premium
    Some of the bank’s corporate exposure spread over multiple sectors has witnessed rapid credit migration over the last few quarters (Reuters)

    New Delhi: India Ratings and Research (Ind-Ra) has downgraded YES Bank Ltd’s long-term issuer rating to A from A ‘plus’ and its short-term issuer rating to A1 from A1 ‘plus’, and placed them on Rating Watch Negative (RWN).

    At 03:18 pm, shares of Yes Bank were 6.6% higher at 49.85 apiece.

    Delay in capital raising and uncertainty regarding the quantum, lower current account deposits, have been the main reasons that triggered the downgrade, Ind-Ra said.

    “Yes Bank had initially planned to raise capital of over $1.2 billion in FY20. Although the bank has announced plans of raising $2.0 billion of equity during the year, clarity is awaited on the potential investors, quantum and the timelines. Further, the various approvals that the bank and/or the investors may require could extend the timeline of the proposed equity infusion," the ratings agency said.

    Some of the bank’s corporate exposure spread over multiple sectors has witnessed rapid credit migration over the last few quarters. In the agency’s opinion, the attempts made by some of these borrowers towards resolutions could take longer than expected to yield results, and a large part of the credit overhang will persist.

    “We continue to factor in the bank’s largely unseasoned loan book on account of high loan growth during FY17-FY18; repayments on some of its corporate exposures are contingent on liquidity events. The gross non-performing assets (GNPAs) and loan accounts rated ‘BB’ and below are about 20% (end-September 2019) of its total book," the ratings agency said.

    The downgrade reflects the inadequate progress with respect to the quantum and pace of equity infusions, which is critical for providing sufficient cushion for the credit cost impact of the stressed asset pool. Although the liquidity position of the bank seemed adequate at end-September 2019, Ind-Ra believes that in the absence of improvements on the capital side, the ability of the bank to manage its asset and liability maturities might be tested further.

    "Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!" Click here!

    Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
    More Less
    Updated: 19 Dec 2019, 03:44 PM IST
    Next Story
    Recommended For You
    Switch to the Mint app for fast and personalized news - Get App