The Hindu Business Line : `Healthy fundamentals help financial cos avoid default ratings'

Strengthening of business and financial fundamentals, strong parentage, consolidation in the sector and the resultant dominance of high and highest safety category ratings in the sector have lead to this phenomenon. The ratings outlook for the sector continues to be stable in the medium term, said Crisil in a press statement.

According to Mr D. Thyagarajan, Director, Financial Sector Ratings, Crisil, "A multiple of factors have been responsible for the strengthening business and financial fundamentals of Crisil-rated financial sector entities. These include change of business model with significant retail thrust, secular improvement in core profitability occurring as a result of considerable interest cost savings, treasury profits, improved asset quality and enhanced efficiency levels.''

Says Mr Krishnan Sitaraman, Head-Financial Sector Ratings, Crisil, "We expect the vast majority of our rated financial sector entities to maintain their credit profiles in the medium term as a large proportion of our financial sector ratings have `stable' outlooks. Ninety-three per cent of all the published outlooks in financial sector ratings are stable while the remaining 7 per cent are positive as at March 31, 2004.''

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