ICRA Low­ers Cor­pBank’s Bond Rat­ing

The Economic Times - - Companies & Economy - Our Bu­reau

Kolkata: ICRA has down­graded Cor­po­ra­tion Bank’s ₹ 700 crore tier-II bonds rat­ing by a notch to “AA-” from “AA”, fol­low­ing a sharp de­te­ri­o­ra­tion of its as­set qual­ity to 15.5%. The out­look on the long-term rat­ing is neg­a­tive, re­flect­ing the ex­pected pres­sure on the bank’s over­all credit pro­file as the as­set qual­ity is likely to re­main weak in the medium term, the rat­ing firm said. The state-run bank’s gross non-per­form­ing as­sets ra­tio rose to 15.5% as on June 30 from 11.7% a quar­ter back while the pro­vi­sion cov­er­age re­mained low at 31.5%.

“So, given the cur­rent low pro­vi­sion cov­er­age ra­tio, ICRA ex­pects the bank’s credit costs to re­mains high in the near to medium-term on ac­count of both in­cre­men­tal slip­pages and age­ing of cur­rent NPAs; thus, prof­itabil­ity and in­ter­nal gen­er­a­tion go­ing for­ward would re­main sub­dued,” the rat­ing com­pany said in a re­lease.

The bank’s fresh NPA gen­er­a­tion rate in­creased steeply from 5.9% in FY2017 to16.4% (an­nu­alised) in the quar­ter to June on ac­count of higher fresh slip­pages from large cor­po­rate ac­counts. How­ever, ICRA has reaf­firmed the bank's short-term rat­ing on 30,000 crore of cer­tifi­cate of de­posits.

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