CRISIL reaffirms stable rating for ICICI Bank debt instruments

The rating agency said ICICI Bank's exposure to the Videocon group is 'in itself not material in the context of its outstanding loan book or capital'

Rating agency CRISIL on Friday reaffirmed AAA/Stable rating for ICICI Bank's debt instruments, amid the controversy over alleged conflict of interest in the bank's loan to Videocon.

The rating agency said the bank's exposure to the Videocon group is "in itself not material in the context of its outstanding loan book or capital." The account has already been classified as a non-performing asset (NPA) with sizeable provisioning by the bank, and any additional provisioning or even write-offs for that account are not likely to impact the bank's credit risk profile.

CRISIL will also monitor developments on the Videocon investigation and watch out for any potential outcomes on areas such as management stability or fund-raising ability, and suitably factor them in its rating. Earlier this week, Fitch Ratings said the ongoing investigation posed a "reputational risk" to ICICI Bank.

Fitch said ICICI Bank Chief Executive Officer Chanda Kochhar's presence on the credit committee that approved the Videocon loan and the bank's reluctance to support an independent probe created doubts over the strength of its corporate governance practices.

CRISIL, however, said its rating reflects the bank's healthy capitalisation, strong market position and comfortable resource profile.

The bank's portfolio is divided equally between corporate and retail lending as of December 31, 2017. While corporate NPA pose a problem, asset quality on the retail side are expected to remain stable in the medium term, according to CRISIL.

ICICI Bank's healthy capital position, coupled with its demonstrated ability to raise capital and steady pre-provisioning profits cushion the bank's credit risk profile against asset quality risks, the rating agency added. 

CRISIL also anticipates ICICI Bank to continue building upon its strong market position, while maintaining its healthy capitalisation levels and strong liability franchise, even as it strives to improve its asset quality.