Global rating agency Moody’s upgraded its outlook on Yes Bank from ‘stable’ to positive over expectation of a gradual improvement in its depositor base and lending franchise which will help improve its core profitability over the next 12-18 months.

Moody’s said in a statement, “We expect Yes Bank’s core profitability, which is measured by pre-provisioning profits to total assets, will gradually improve to above 1.2 per cent over the next 12-18 months from 0.8 per cent in the financial year ended March 2024.”

Yes Bank’s funding and liquidity are modest compared with those of other large private-sector Indian banks that the agency rates, Moody’s said, adding, “We expect the bank’s funding costs to remain higher than its peers’ over the next 12-18 months because of increasing competition among banks for deposits.”

Avinash Gorakshkar, Head of Research at Profitmart Securities, said, “Global rating agency Moody’s has upgraded its outlook on Yes Bank from stable to positive. This triggered buying Yes Bank shares in the early morning session. This change in outlook means global brokerage’s expectations of a potential rise in the depositors’ base of the private lender.”