BackMoodys affirms deposit ratings for five Indian banks
The ratings agency also affirms credit risk assessments for 12
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Mumbai: Moodys Investor Services on Monday affirmed deposit ratings for ICICI Bank, Axis Bank, Bank of Baroda, Bank of India and Canara Bank.
In a statement on its website, Moodys stated that it was also affirming the baseline credit assessment (BCA) for ICICI Bank, Axis Bank and Bank of Baroda at baa3, baa3 and ba2, respectively. The ratings agency however downgraded the BCA of Bank of India and Canara Bank to ba3 from ba2.
“The outlooks on all the ratings of these banks, where applicable, are Positive," Moodys said in its statement. In case of ICICI Bank and Axis Bank, strong buffers, high level of capital, provision coverage and profitability have ensured higher ratings.
For Bank of Baroda, headwinds arising in the loan portfolio remain, though the situation is better than other rated public sector banks, the ratings agency said in its statement. Bank of India and Canara Bank faced a downgrade of BCA because of the increasing levels of non-performing loans, Moodys said.
In case of the public sector lenders, the ratings maybe upped if the asset quality metrics of these lenders improve and they are able to demonstrate access to the capital markets to raise funds, the statement said. For ICICI Bank and Axis Bank, a BCA upgrade would depend on a sovereign rating upgrade for the country, since they are at the same level presently.
The ratings agency also assigned counterparty risk (CR) assessment to 12 Indian banks, which included four private sector lenders, namely ICICI Bank, HDFC Bank, Axis Bank and Yes Bank and eight state-owned lenders namely Bank of India, Bank of Baroda, Canara Bank, Central Bank of India, Indian Overseas Bank, Punjab National Bank, Syndicate Bank and Union Bank of India.
“CR assessments are opinions of how counterparty obligations are likely to be treated if a bank fails, and are distinct from debt and deposit ratings... A CR assessment is an opinion of the counterparty risk related to a bank’s covered bonds, contractual performance obligations, derivatives, letters of credit, guarantees and liquidity facilities," the statement said.
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