The credit rating agency has affirmed the bank's long-term foreign currency issuer rating and the long-term (local and foreign currency) deposit rating at 'Ba3'. It has also affirmed the bank's baseline credit assessment (BCA) and adjusted BCA rating and senior unsecured (foreign currency) medium-term note program rating at 'b1' and '(P)Ba3', respectively.

Moody's said that the rating affirmation and stable ouHook is driven by the improvement in India's macro profile to ‘moderate+' from ‘moderate', along with Moody's expectation that Yes Bank's financial performance will remain stable over the next 12- 18 months.

The agency expects Yes Bank's asset quality to be stable as the bulk of its legacy problem assets have been resolved, while India's good economic momentum will support the performance of its newly originated loans.

Its gross nonperforming loan (NPL) ratio declined to 2.2% at the end of March 2023 from 13.9% a year earlier, following its sale of nonperforming loans (NPL) to an asset reconstruction company (ARC) in 2022. Its loan loss coverage declined to 62% at the end of March 2023 from 71 % a year earlier following the NPL sale, but Moody's expects it will recover as the bank rebuilds its loan loss reserves.

Yes Bank's capital improved post a capital raise from private investors in 2022, with its common equity tier-1 (CET-1) ratio rising to 13.3% at the end of March 2023 from 11.6% a year ear1ier. The private investors have also subscribed to equity share warrants, which will likely convert in 2024.

Based on the bank's capital position at the end of March 2023, Moody's estimates that the conversion of equity share warrants will provide a further 1.5 percentage point boost to the bank's CET-1 ratio.

The bank's return on assets declined to 0.2% in fiscal 2023 from 0.4% in fiscal 2022 as it increased provisions against its nonperforming assets. Moody's expects Yes Bank's profitability to gradually improve over the next 12-18 months as it restarts loan growth and the burden of credit costs eases.

Its funding and liquidity also improved as its deposits grew. Its average liquidity coverage ratio rose to 119% for the quarter ended March 2023 from 115% as of 31 March 2022.

Yes Bank is a full-service commercial bank providing a complete range of products, services and technology driven digital offerings, catering to retail, MSME as well as corporate clients.

The private lender's standalone net profit slumped 44.91% to Rs 202.43 crore in Q4 FY23 as against Rs 367.46 crore recorded in Q4 FY22. Total income jumped 25.2% year on year (YoY) to Rs 7,298.51 crore in the quarter ended 31 March 2023.

The scrip rose 0.94% to currently trade at Rs 16.13 on the BSE.