Credit rating agency Crisil has upgraded to ‘stable’ from ‘negative’ the debt instruments of ICICI Bank and said that the bank is likely to sustain the improvement in earnings profile.
“Crisil has revised its rating outlook on ICICI Bank Upper Tier II bonds and Tier I Perpetual bonds to Stable from Negative,” it said in a release.
The bank is also likely to sustain the improvement in its earnings profile. “The future growth will be supported by its increased branch network, and growth in secured asset classes over the medium term,” Crisil said .
“Our fee income from corporate and retail banking has been increasing sequentially for the past four quarters and will continue so in the coming quarters,” ICICI Bank Executive Director and CFO N S Kannan told PTI.
At the end of March 31, the bank’s fee income stood at Rs 5,600 crore.
Further, 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 and Tier I Perpetual bonds.
Kannan said that the bank is continuously improving its credit quality by bringing down its retail unsecured loans.
Also it is expanding its branch network while maintaining the costs at the current level.
ICICI Bank’s credit cost is likely to decline over the next few quarters because of easing of pressure on the bank’s asset quality, the rating agency said.
At the end of March 31, the bank’s gross non-performing assets (NPAs) stood at 5.1 per cent, against an estimated banking system average of 2.3 per cent.
“We are gradually reducing the provision for bad assets.
We are reducing our gross NPA that will bring down the provisioning also,” Kannan said.
However, the rating agency has said that risky exposures in the bank’s corporate loan book would remain a concern for the bank.
“The bank’s asset quality will remain average, compared with that of its peers... Given the bank’s large-ticket exposures in its corporate loan book, its asset quality will also remain susceptible to any adverse economic changes,” Crisil said.
