YES Bank share price in focus today; here's why

Shares of YES Bank Ltd are in focus on Wednesday after Crisil Ratings upgraded its long term rating on the lender's Tier-II bonds (under Basel III) and infrastructure bonds to 'Crisil AA+/Stable' from 'Crisil AA-/Stable’. Crisil Ratings also reaffirmed its ‘Crisil A1+’ short term rating on the certificates of deposit (CD).

Crisil said its rating action was driven by an improvement in the credit profile of YES Bank, as well as a change in the analytical approach to factor in the expectation of support from Sumitomo Mitsui Banking Corporation (SMBC)―the single largest shareholder― on an ongoing basis as well as in the event of any distress.

"YES Bank's credit profile is supported by consistent improvement in its profitability, a trend that is expected to continue over the medium term. Its liability franchise has also strengthened, reflected in a lower cost of deposits; this is likely to be sustained. Asset quality metrics remain controlled, while capitalisation levels continue to be comfortable," Crisil said.

The rating agency said YES Bank's earnings profile has exhibited sustained improvement, with the return on assets (RoA) increasing to 0.9 per cent in the first quarter and 0.8 per cent in FY26 from 0.6 per cent in FY25.

YES Bank shares are up 21 per cent in the past one year compared with a 3.2 per cent drop in the BSE Sensex during the same period. That said, the stock is down 6.3 per cent in the past one month against 0.9 per cent rise in the BSE benchmark.

The improvement in RoA in FY26 was supported by lower provisions, benefiting from recoveries from the securities receipt (SR) book, and higher non-interest income, the rating agency said adding that YES Bank's net interest margin (NIM) remained stable despite the falling interest rate environment as the bank was also able to
reduce its cost of deposits in tandem. This has narrowed the gap with larger peers with respect to deposits costs.

The bank’s average cost of deposits declined to 5.7 per cent in FY26 from 6.1 per cent in FY25. This trajectory continued in Q1FY27 as well, with cost of deposits falling further to 5.4 per cent.

"While profitability remains lower than larger peers, as the benefit from lower deposit costs plays out, and the drag on interest income from investments in the Rural Infrastructure Development Fund (RIDF) to meet the priority sector lending (PSL) shortfall reduces with the fall in share of such investments, it should continue to improve hereon," Crisil said.

The business profile of YES Bank, both assets and liabilities, is also expected to benefit from the association with SMBC, it said.

In the period since its induction as YES bANK'S single largest shareholder, SMBC has exhibited close involvement in, and provided considerable support for, the bank’s strategic decision-making through the appointment of two senior nominee directors to the
Board, Crisil said.

"The collaboration framework is expected to benefit the bank through potential business synergies, particularly in the wholesale banking segment, by providing access to SMBCs global and Indian network. This would also strengthen the bank's liabilities profile by facilitating the acquisition of new current and savings account customers," Crisil said.

It said the association is expected to contribute positively to Yes Bank’s risk management, governance, and operational capabilities through the transfer of SMBC’s global best practices. Steps in this direction have already been taken, Crisil said.