Yes Bank shares dropped as much as 5% in intra-day trade on Monday after rating agency ICRA downgraded the lender’s long-term bond ratings and guided for a negative outlook.
The Yes Bank stock was trading at Rs168.65, down 4%, on BSE at 12:40pm.
ICRA downgraded Yes Bank’s tier-I bond from AA- to A and tier-II bonds from AA to AA-. The outlook is negative on both bonds, Yes Bank said in a press note to the exchanges.
Yes Bank’s ability to resolve below-rated advances in a timely manner will remain a key driver of its asset quality, profitability and capital position, said ICRA.
ICRA also said that the bank’s capital buffers may weaken following voluntary provisions and heavy losses in the March quarter. Yes Bank had reported its highest ever quarterly loss of Rs1,507 crore for the three-month period ended March on the back of provisions against bad loans. The bank’s shares had lost over 35% since the earnings announcement.
Last November, ICRA had placed Yes Bank’s ratings under watch with negative implications after the Reserve Bank of India (RBI) had refused Rana Kapoor to head the bank beyond 31 January 2019, citing corporate governance issues.
In a separate development, RBI also imposed a penalty of Rs 11.25 lakh on Yes Bank for violating money transfer norms. “(The) Reserve Bank of India (RBI) vide its speaking order dates April 22, 2019, imposed a penalty of Rs 11,25,000 under the Payment and Settlement Systems Act, 2007," Yes Bank said in a regulatory filing.
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