S&P assigns Yes Bank a 'BB+' long-term credit rating with a stable outlook, highlighting SMBC's strategic support. The bank shows improving asset quality but lags industry in RoA.
Yes Bank Assigned 'BB+' Credit Rating, Stable Outlook
Yes Bank's Long Term Issuer Credit Rating is BB+ with a Stable Outlook, and its Short Term Issuer Credit Rating is B.
Reader Takeaway: SMBC's support bolsters rating; retail slippage and funding concentration pose risks.
What just happened
S&P Global Ratings has assigned Yes Bank a Long Term Issuer Credit Rating of 'BB+' with a Stable Outlook and a Short Term Issuer Credit Rating of 'B'. This marks a significant development for the bank, providing an external assessment of its creditworthiness.
Why this matters
The 'BB+' rating signifies that Yes Bank is viewed as having speculative characteristics and is more vulnerable to adverse economic conditions. The Stable Outlook suggests that S&P does not expect the rating to change in the near future. A key driver for this rating is the expectation of extraordinary support from its largest shareholder, Sumitomo Mitsui Banking Corp. (SMBC).
The backstory
SMBC acquired a 24.9% stake in Yes Bank in 2025 and exerts significant strategic influence over the bank's risk management, audit, IT, and compliance functions. This partnership provides a one-notch uplift to Yes Bank's credit rating, indicating its importance in the bank's financial standing.
What changes now
With this rating, Yes Bank gains increased transparency in its financial profile for the market. S&P projects credit growth to accelerate to 14%-15% in fiscal years 2027-2028 from 11% in fiscal 2026. The Risk-Adjusted Capital (RAC) ratio is expected to stabilize between 8.0%-8.5% through fiscal 2027-2028.
Risks to watch
S&P highlights two key risks. Firstly, high new nonperforming loan formation in the retail portfolio, especially in unsecured lending, is a concern. Credit costs are expected to rise to approximately 50 basis points in fiscal 2027 and 70 bps in fiscal 2028. Secondly, while wholesale funding share has reduced to 17% from over 20%, funding concentration remains a monitorable factor, with the top 20 depositors holding 11.3% of total deposits as of March 2025.
Peer comparison
Yes Bank's Return on Assets (RoA) stood at 0.8% as of fiscal 2026, which lags behind the industry average of 1.3%. However, asset quality has improved, with the Gross Nonperforming Loans to Customer Loans ratio falling to 1.3% by end-March 2026 from 1.6% a year earlier.
Context metrics (time-bound)
- Gross NPL Ratio: 1.3% (FY26) vs 1.6% (FY25)
- CASA Ratio: 35% (FY26) vs 34% (FY25)
- Wholesale Funding Share: 17% (FY26) vs >20% (FY25)
- RoA: 0.8% (FY26), Industry Avg: 1.3%
- RAC Ratio: 9.0% (March 2026), projected 8.0%-8.5% (FY27-28)
- Credit Growth: 11% (FY26), projected 14%-15% (FY27-28)
What to track next
Investors will be keen to observe Yes Bank's progress in improving its RoA, which is projected to exceed 0.9% by fiscal 2028, as it shifts focus to retail and SME segments. Monitoring underwriting standards amidst loan growth and managing unsecured retail slippage will be crucial.