India Ratings and Research (Ind-Ra) on Wednesday downgraded Yes Bank's long-term ratings to 'IND AA-' with negative outlook. The development comes a day after rating agency ICRA lowered the bank's rating.
ICRA has also downgraded the ratings on its six instruments totalling borrowings over Rs 33,000 crore by the lender.
Source: India Ratings and Research report
In its report, Ind-Ra said, "Expect some of these assets to slip into the non-performing category; the need to provide beyond Rs 21 billion of contingent provisions in FY19 and credit cost guidance of 1.25 percent for FY20 in the event of inadequate or delayed resolution of these assets could keep the operating buffers and capital buffers under further pressure."
It further added, "The appointment of a new CEO (Ravneet Gill) with his new strategy of focusing on asset and liabilities could take two years to show meaningful traction."
The rating on YES Bank also factors in the limited ability to raise substantial equity capital, relatively high proportion of bulk funding and asset-liability tenor mismatches, said the report.
Ind-Ra stated that it will revise the private lender's outlook to 'stable' only if it sees material improvement in the operating performance, and strengthened capital level.
First Published: IST