Fitch upgrades Indusind Bank on strong capital, asset quality

Rating agency Fitch today upgraded long-term rating of Indusind Bank by one notch on the back of its strong capitalisation and better asset quality management.

Fitch Ratings has upgraded Indusind Bank's Long-Term rating to AA- from A+. While A denotes expectations of low default risk, AA signifies very low default risk.

"The upgrade in Indusind Bank's national LT rating reflects its strong capitalisation, proven track record of asset quality management and profitability that is driven by its strong fees income profile and above systemic average interest margins," Fitch said in a release.

Besides, Fitch has also accorded positive outlook to the bank's short-term rating from F1 to F1+. F1 is the highest short-term rating.

 

The agency expects the bank's funding to benefit from a rapid expansion of its branch network in the next three to five years. At present, its funding profile is oriented towards large-ticket bulk deposits due to its limited branch network.

Moreover, its' branch expansion plans would necessitate greater operating expense, which would prevent any substantial reduction in its moderately high cost to income ratio.

However, the rating agency cautioned that the bank's asset quality may deteriorate over the medium term as it plans to expand its loan book in newer segments like mortgage loans and small industry loans, among others.