Axis Bank clarifies S&P made an error by downgrading it to credit watch1 min read . Updated: 28 Jun 2020, 08:56 AM IST
S&P had downgraded ratings of Axis Bank and four Indian non-bank financiers, citing worsening operating conditions as a result of the covid-19 pandemic
Axis Bank on Saturday clarified that S&P Global ratings inadvertently mentioned the bank being on credit watch. In a notification to the stock exchanges, the private sector lender said that S&P confirmed that it was an editorial error and the bank is on stable outlook.
S&P had downgraded ratings of Axis Bank and four Indian non-bank financiers, citing worsening operating conditions as a result of the covid-19 pandemic. Axis Bank’s issuer credit rating was cut one notch to BB+, indicating junk status.
S&P said the stable outlook reflects the rating agency's view that ratings on Axis already factor in some deterioration in the bank's asset quality and performance over the next 12 months. "While Axis' asset quality is superior to the Indian banking sector average, its level of nonperforming assets (NPAs) will likely remain high compared to international peers'. Nevertheless, we expect the bank to maintain its strong market position and adequate capitalization,"it said.
As on 31 March, 4.86% of the bank’s total loans were non-performing, 14 basis points (bps) below the figure for the December quarter of 2019-20.
The agency said it could further lower the ratings on Axis Bank if its stressed assets rise significantly beyond the system average over the next few quarters. It added that an upward revision will be contingent upon its asset quality turning significantly superior to that of domestic peers and commensurate with international peers over the next 18 months.