Yes Bank , one of India's leading private sector banks, is poised for a significant boost as Sumitomo Mitsui Financial Group (SMFG) plans to invest an additional $1.1 billion in the institution. This development comes alongside an upgrade in the bank's credit ratings, signaling a positive outlook for its financial stability and growth prospects.

SMFG's Strategic Investment

SMFG is reportedly planning to invest an additional $1.1 billion in Yes Bank. This investment includes:

• Acquiring a 5% stake from Carlyle Group and others
• Potentially purchasing $680 million in convertible bonds

If completed, SMFG's total stake in Yes Bank would increase to about 25%. The news of this potential investment led to a 3.3% rally in Yes Bank's shares.

Credit Rating Upgrade

ICRA, a prominent credit rating agency, has upgraded Yes Bank's ratings for several financial instruments:

• Infrastructure Bonds and Basel III Tier II Bonds: Upgraded to [ICRA]AA- (Stable) from [ICRA]A (Positive)
• Basel III Tier I Bonds: Reaffirmed at [ICRA]D (These instruments were previously written down as part of the restructuring of liabilities)

The rating upgrade reflects Yes Bank's improving financial health and operational performance. ICRA cited several factors contributing to this positive assessment:

1. Steady increase in the bank's scale of operations
2. Improving mix of the loan book with a growing share of granular loans
3. Continued decline in the stressed assets pool
4. Stable earnings and capital position
5. Steady recoveries from security receipts (SRs)

Key Financial Indicators

Yes Bank has shown improvement in several key areas:

• Loan Book Growth: 8% year-on-year growth
• Deposit Base Growth: 7% year-on-year increase

Future Outlook

The planned stake acquisition by Sumitomo Mitsui Banking Corporation (SMBC), which is set to become the single largest shareholder pending regulatory approvals, is expected to further strengthen Yes Bank's position in the market.

ICRA maintains a stable outlook for Yes Bank, anticipating that the bank will maintain a steady credit profile while scaling up operations and improving profitability metrics. However, the agency notes that the impending judgment of the Supreme Court regarding the potential writeback of Additional Tier-1 (AT-1) bonds remains a key factor to monitor.

As Yes Bank continues to focus on improving its core operating profitability and asset quality, the combination of SMFG's planned investment and the credit rating upgrade positions the bank for potentially stronger performance in the coming years.

Note: All financial figures are based on data as of March 31, 2025, as reported in the ICRA credit rating update.

Yes Bank , one of India's prominent private sector banks, has released its Q1 business update, revealing a mixed performance with declines in key metrics alongside some improvements.

Loan and Deposit Performance

The bank reported a quarter-on-quarter decline in both loans and deposits for the first quarter. Loans fell by 2.00% to ₹2.41 lakh crore, indicating a slight contraction in the bank's lending activities. Similarly, deposits decreased by 3.00% to ₹2.75 lakh crore, suggesting a minor outflow of funds from the bank during the quarter.

Improved CASA Ratio

Despite the overall decline in deposits, Yes Bank saw an improvement in its Current Account Savings Account (CASA) ratio. The CASA ratio, a key indicator of a bank's ability to gather low-cost deposits, improved year-on-year to 32.70%. This increase suggests that the bank has been successful in attracting and retaining more low-cost deposits, which could potentially help in improving its profitability. However, it's worth noting that the CASA ratio declined from the previous quarter.

Credit-Deposit Ratio

The bank's credit-deposit ratio increased to 87.50%. This ratio, which measures how much of a bank's deposits are being used for lending, indicates that Yes Bank is utilizing a significant portion of its deposits for credit activities.

While the decline in loans and deposits may raise concerns about the bank's growth trajectory, the improved year-on-year CASA ratio and the higher credit-deposit ratio suggest that Yes Bank is focusing on optimizing its deposit mix and maintaining a robust lending position relative to its deposit base.