Yes Bank witnessed a surge in its stock price today after global rating agency Moody’s revised its outlook from ‘stable’ to ‘positive’. The positive outlook reflects Moody’s expectation of a gradual improvement in Yes Bank’s depositor base and lending franchise, which is anticipated to enhance its core profitability over the next 12-18 months.
Stock Market Response
Following the upgrade, Yes Bank’s shares opened with an upward gap at ₹26.10 on the NSE and quickly reached an intraday high of ₹26.60 per share during early morning trading.
Moody’s Outlook
Moody’s highlighted in a statement, “We anticipate Yes Bank’s core profitability, as measured by pre-provisioning profits to total assets, to steadily increase to above 1.2 per cent over the next 12-18 months, up from 0.8 per cent in the financial year ending March 2024.”
Funding and Liquidity Position
Moody’s noted that Yes Bank’s funding and liquidity are modest compared to other large private-sector banks in India that it rates. The agency expects Yes Bank’s funding costs to remain higher relative to its peers due to intensifying competition for deposits among banks.
Market Analysts’ Perspectives
Commenting on the upgrade, Avinash Gorakshkar, Head of Research at Profitmart Securities, remarked, “Moody’s positive outlook revision for Yes Bank has sparked buying interest in the bank’s shares during the early morning session. This change signals the brokerage’s anticipation of potential growth in the private lender’s depositor base.”
Conclusion
The upgrade by Moody’s is seen as a positive development for Yes Bank, reflecting growing confidence in its operational improvements and financial stability. Investors and market analysts are optimistic about the bank’s future prospects as it aims to strengthen its position in the banking sector.
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