Fitch downgrades ICICI Bank, revises Axis Bank rating to negative
Axis Bank's capital buffers are less comfortable for its current rating despite raising of fresh capital
 "The HFC's loan book currently stands at ~ 100 billion and the company aims to triple it to Rs 300 billion in three-four years")
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The HFC’s loan book currently stands at ~ 100 billion and the company aims to triple it to Rs 300 billion in three–four years
Fitch has downgraded its support rating for ICICI Bank from ‘2’ to ‘3’ and revised the outlook on Axis Bank to ‘negative’ from ‘stable’.
The outlook on ICICI Bank is, however, ‘stable’.
Support ratings reflect expectation of a moderate probability of extraordinary state (government) support, if required. This is due to private ownership and lower systemic importance compared to larger banks.
The revision in ICICI’s support rating takes into account the constrained finances. A large number of weak government-owned banks — particularly those which are systemically important — will get priority in terms of timeliness of government support.
It affirmed the long-term issuer default ratings (IDRs) and viability ratings of ICICI Bank and Axis Bank at ‘BBB-’ and ‘bbb-’, respectively.
The negative outlook on Axis’s rating reflects rising pressure on its standalone profile relative to banks with a viability rating of ‘bbb-’. The pressure on the profile stems from heightened asset-quality stress and weak earnings.
Axis Bank’s capital buffers are less comfortable for its current rating despite raising of fresh capital. ICICI’s capital buffers are better even though it experienced similar financial deterioration in the previous few years.
The outlook on ICICI Bank is, however, ‘stable’.
Support ratings reflect expectation of a moderate probability of extraordinary state (government) support, if required. This is due to private ownership and lower systemic importance compared to larger banks.
The revision in ICICI’s support rating takes into account the constrained finances. A large number of weak government-owned banks — particularly those which are systemically important — will get priority in terms of timeliness of government support.
It affirmed the long-term issuer default ratings (IDRs) and viability ratings of ICICI Bank and Axis Bank at ‘BBB-’ and ‘bbb-’, respectively.
The negative outlook on Axis’s rating reflects rising pressure on its standalone profile relative to banks with a viability rating of ‘bbb-’. The pressure on the profile stems from heightened asset-quality stress and weak earnings.
Axis Bank’s capital buffers are less comfortable for its current rating despite raising of fresh capital. ICICI’s capital buffers are better even though it experienced similar financial deterioration in the previous few years.