ICICI gets AAA rating, to stay strong in market

ICICI gets AAA rating, to stay strong in market
Comment E-mail Print Share
First Published: Thu, Jul 16 2009. 06 10 PM IST
Updated: Thu, Jul 16 2009. 06 10 PM IST
New Delhi: ICICI Bank’s market position would remain strong despite moderating advances growth, credit rating agency Crisil said on Thursday, according the highest degree of rating on the bank’s long-term debt instruments.
Crisil reaffirmed its ‘AAA’ rating, which reflects the highest degree of safety with regard to timely payment of financial obligations, on the bank’s Upper Tier II bonds, Tier I Perpetual bonds and bonds/debentures.
“The reaffirmation factors in ICICI Bank’s healthy capitalisation and strong market position, and demonstrated capabilities of the bank’s management,” a Crisil release said.
However, it said, the outlook on the ICICI Bank’s Upper Tier II and Tier I Perpetual bonds had been revised to ‘negative´ from ‘stable´, reflecting expectation of continued pressure on the bank’s core earnings and asset quality over the near term.
ICICI Bank executive director and CFO N.S. Kannan said the pressure on asset quality has been mainly from retail unsecured portfolio, including credit cards and personal loans. “We have incrementally stopped lending for personal and two-wheeler loans and, wherever we are doing it, it is through our branches to our own customers and not via third party agents,” Kannan said.
Crisil expects the bank’s market position to remain strong despite moderating advances growth, because of the 580 new branches it is likely to add in 2009-10, and its wide presence across segments.
“Crisil has reaffirmed its AAA rating on our debt instruments and have highlighted our strong capitalisation, franchise and management capabilities. They have endorsed our strategy of CASA growth, cost reduction, credit control and capital conservation,“ Kannan said.
Crisil expects ICICI Bank’s core profitability to remain constrained over the near term because of tightening fee income and higher levels of provisioning.
The bank saw its fee-based income fall during the March quarter to Rs1,343 crore, from Rs1,928 crore in same quarter in FY’08.
“Aggregate fee income in 2008-09 did not grow over the previous year’s level, with a decline in the second half of the year reflecting the unfavourable economic environment affecting key areas such as corporate and investment banking, retail loans, and distribution,” the Crisil release said.
In the March quarter, the country’s largest private sector lender reported a 35.30 per cent decline in net profit at Rs744 crore. Total income also slipped 11.43% to Rs9,203 crore in the fourth quarter of FY’09.
Comment E-mail Print Share
First Published: Thu, Jul 16 2009. 06 10 PM IST
More Topics: ICICI Bank | AAA Rating | Credit | Markets | BSE |