CRISIL downgrades Edelweiss Financial Services' long-term rating to 'A+'

The group's overall credit profile is supported by adequate capitalization, and a diversified business profile with good market position in asset reconstruction and asset management businesses

CRISIL Rating has downgraded the long-term rating on the debt instruments of Edelweiss Financial Services Ltd (Edelweiss) from “AA-” to “A+”. The rating action was driven by a lower-than-expected revival in core profitability, relatively slower growth in retail (including MSME) lending, and a continued high level of un-provided monitorable portfolio.

However, the group’s overall credit profile is supported by adequate capitalisation, and a diversified business profile with a good market position in asset reconstruction and asset management businesses.

The main reason for muted profitability in recent years has been the stress in its wholesale lending book, in turn leading to higher credit costs. The retail book was also impacted and required higher provisioning in the aftermath of the Covid-19 pandemic, the rating agency added.