<\/p>\n
Moody\u2019s said, \u201cYes Bank’s successful equity capital raise of INR150 billion (about $2 billion) has bolstered its solvency and is the main driver of the ratings upgrade. The successful equity raising showcases Yes Bank’s regained access to external market funds, which is a result of its improving financial strength and will support depositor confidence.\u201d<\/p>\n
The ratings agency sees the bank\u2019s Common Equity Tier 1 ratio to double to 13.4% from 6.6% based on the bank\u2019s capital position at the end of June 2020 which will bring it\u2019s capitalisation in line with its private peers.<\/p>\n
It added in a statement, \u201cYes Bank’s funding and liquidity have moderately improved in the second quarter of 2020, although they are still weaker than a year ago. Deposits<\/a>, including current, savings and term deposits, increased 11% during March and June 2020, but remain 48% less than the same period last year. The deposit growth was largely driven by current account, corporate term deposits and certificate of deposits.\u201d<\/p>\n Moody\u2019s expects it will be challenging for Yes Bank to restore its low-cost current and saving account deposits (CASA<\/a>) to pre-March 2020 levels, however the CASA ratio was weak before the moratorium imposed on March 5 as compared to other private bank\u2019s CASA figures.<\/p>\n Moody\u2019s said, \u201cYes Bank continues to face the risk of a further deterioration in asset quality in light of the ongoing economic disruption caused by the coronavirus<\/a> outbreak. About 40%-45% of the bank’s loans were under a repayment moratorium as of mid-April 2020. Any further deterioration in asset quality will strain the bank’s already weak profitability.\u201d<\/p>\n<\/div>\n