Yes Bank long-term issuer rating slips after major loss in fourth quarter

India Ratings has downgraded Yes Bank's long-term issuer rating from 'IND AA plus' to 'IND AA minus' with a negative outlook. On May 4, rating agency ICRA had downgraded the bank's tier-I bond from 'AA-minus' to 'A' and tier-II bonds from 'AA' to 'AA minus.'

The bank reported its maiden loss of over Rs 1,506 crore in the fourth quarter of 2018-19 ending March 31, driven by a near ten-fold spike in provisions. However, India Ratings and Research (Ind-Ra) affirmed the bank's short-term issuer rating at 'IND A1 plus.'

"The downgrade reflects the quick credit migration (to sub-investment grade) in the bank's certain group exposure," said Ind-Ra adding it expects some of these assets to slip into the non-performing category. The need to provide beyond Rs 2,100 crore of contingent provisions in FY 19 and credit cost guidance of 1.25 per cent for 2019-20 in the event of inadequate or delayed resolution of these assets could keep the operating buffers and capital buffers under further pressure in the 15 to 20 per cent growth scenario.

The negative outlook reflects the downside risks to the agency's estimates of profitability and capital buffers that could emanate from substantial delays in the resolution of certain stressed assets, said Ind-Ra in a statement late on Wednesday. India Ratings is a 100 per cent owned subsidiary of the Fitch Group.

(With inputs from agencies.)