Credit Rating
YES BANK Receives First-Ever S&P Global International Credit Rating with Stable Outlook
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YES BANK has received its first-ever international issuer credit rating from S&P Global Ratings, with a ‘BB+’ Long-Term Issuer Credit Rating, ‘B’ Short-Term Issuer Credit Rating, and a Stable Outlook. The rating reflects S&P’s expectation of continued strategic and extraordinary support from Sumitomo Mitsui Banking Corporation (SMBC), alongside improving profitability, asset quality, funding profile, and capitalization. Â
PRICE-SENSITIVE TRIGGER
Event: Assignment of First-Ever International Issuer Credit Rating by S&P Global Ratings
Type: Credit Rating
Impact: Positive
Immediate Effect: The rating enhances YES BANK’s international credit profile, strengthens credibility with global investors and lenders, and may improve access to overseas funding markets. However, the BB+ rating remains one notch below investment grade. Â
Financials:
Key Metrics:
- Long-Term Issuer Credit Rating:Â BB+
- Short-Term Issuer Credit Rating:Â B
- Rating Outlook:Â Stable
- Rating Agency:Â S&P Global Ratings
- Standalone Credit Profile (SACP):Â BB
- Anchor Rating:Â BBB-Â (Indian banking system)
- SMBC Shareholding:Â 24.9%Â (acquired in 2025)
- Current Return on Assets (FY2026):Â 0.8%
- Expected Return on Assets (FY2028):Â Above 0.9%
- Expected Loan Growth (FY2027–FY2028): 14%–15%
- Expected Risk-Adjusted Capital (RAC) Ratio: 8.0%–8.5%
- RAC Ratio (March 2026):Â 9.0%
- Gross Non-Performing Loan (GNPL) Ratio:Â 1.3%Â (March 2026)
- Previous GNPL Ratio:Â 1.6%
- CASA Ratio:Â 35%Â (vs. 34% a year earlier)
- Loan-to-Deposit Ratio:Â ~85%
- Retail & Branch-led Deposits:Â Nearly 60%Â of total deposits
- Wholesale Funding:Â ~17%Â of total funding base
- Average Cost of Funds:Â 6.0%
- Expected Credit Cost: Around 50 bps (FY2027) and 70 bps (FY2028). Â
Highlight:
- YES BANK secured its first international issuer rating, with S&P recognizing gradual improvements in profitability, funding profile, capitalization, and asset quality, supported by its strategic partnership with SMBC.
What Happened ?
YES BANK informed the stock exchanges that S&P Global Ratings has initiated coverage of the Bank by assigning:
- BB+ Long-Term Issuer Credit Rating
- B Short-Term Issuer Credit Rating
- Stable Outlook
S&P stated that the ratings incorporate one notch of uplift due to the expected extraordinary support from SMBC, which became the Bank’s largest shareholder after acquiring a 24.9% stake in 2025. S&P expects the relationship to accelerate improvements in business growth, profitability, funding diversification, and risk management. Â
Key details
Rating Assignment:
S&P assigned:
- BB+Â Long-Term Issuer Credit Rating
- BÂ Short-Term Issuer Credit Rating
- Stable Outlook
Why S&P Assigned the Rating:
According to S&P:
- SMBC’s strategic ownership significantly strengthens the Bank’s credit profile.
- YES BANK is expected to receive extraordinary support during financial stress if required.
- The Bank is improving underwriting standards, governance, risk management, and operational capabilities through collaboration with SMBC.
- Business opportunities are expected to expand through client referrals, loan syndication, and international funding channels. Â
Operational Improvements:
S&P highlighted several improving trends:
- Loan market share stands at approximately 1.2%, while deposit market share is about 1.3%.
- Return on Assets improved to 0.8% in FY2026.
- Retail loans now account for 46% of advances, SME loans 26%, and Corporate & Institutional Banking 28%.
- Gross NPA ratio improved to 1.3%.
- CASA ratio increased to 35%.
- Loan-to-deposit ratio improved to around 85%.
Growth Expectations:
S&P expects:
- Credit growth of 14%–15% over FY2027 and FY2028.
- Net interest margin to improve by around 30 basis points.
- Return on Assets to exceed 0.9% by FY2028.
- Funding costs to decline as CASA improves and overseas funding options expand through SMBC.
- Continued strengthening of underwriting quality and market share. Â
Risk Analysis
Summary:
- Although the first international rating is a significant milestone, YES BANK remains below investment grade (BB+), indicating that execution risks still exist. Sustaining profitability improvements, maintaining asset quality, and reducing dependence on wholesale funding remain critical.
Key Risks:
- Rapid loan growth could pressure asset quality.
- Elevated unsecured retail lending may increase credit costs.
- Profitability remains below larger private-sector peers.
- Wholesale funding and depositor concentration are still higher than industry averages.
- Any weakening of SMBC’s strategic support could negatively affect the rating. Â
Worst Case:
S&P could downgrade the Bank if:
- Asset quality deteriorates materially because of rapid growth or higher non-performing loans.
- Credit costs rise significantly above expectations.
- SMBC’s strategic importance or commitment to YES BANK weakens.
Risk Level: Medium
Company Commentary
- The Bank stated that this represents its first rating coverage by S&P Global Ratings, with the detailed rationale enclosed as part of the regulatory filing. Â
Official Exchange Filing: YES BANK Limited
