ICRA downgrades Yes Bank ratings, outlook negative

Rating agency ICRA on Thursday downgraded Yes Bank's Rs 52,911.70 crore worth bond programme citing continued uncertainty regarding the timing and quantum of capital raised by the bank.

ICRA said that with the delay in capital raise and a likely increase in the NPAs, the capital and solvency profile are expected to weaken further. Hence, the need to raise capital is "immediate".

"The bank's solvency profile remains weak with net NPA/CET of 36 per cent as on September 30, 2019 (27 per cent as on June 30, 2019) apart from the stressed exposures in the investment book, " ICRA said.

Yes Bank earlier this month had postponed a decision to consider the binding offer of $1.2 billion -- 60 per cent of the total capital the bank aims to raise -- submitted by mysterious investor Erwin Singh Braich.

Yes Bank, however, after its 5 hour long board meet on December 10 said that it is willing to "favourably consider the offer of $500 Million of CitaxHoldings and Citax Investment Group and the final decision regarding allotment to follow in the next board meeting.."

On Braich's offer, the bank said the binding offer of US$1.2 billion submitted by Erwin Singh Braich / SPGP Holdings continues to be under discussion.

ICRA highlighted that even if the bank accepted the said offer, it would need to reduce its share of stressed loans and prevent slippages from its standard BB and below rated exposures, given their sizeable quantum in relation to the core capital.

In the ongoing quarter, in the absence of any material recoveries and considering the expected slippages from the BB and below rated loan book, agency noted.

"We expect the reported non-performing advances (NPAs) to increase further, " ICRA said.