Moody’s Investors Service has affirmed Export-Import Bank of India (Exim Bank)’s foreign currency long-term deposit, issuer, and senior unsecured debt ratings of Baa3.
The Baa3 foreign currency issuer and senior unsecured debt rating is in line with the Baa3 rating for the Indian Government.
The foreign currency short-term deposit rating for Exim Bank remains at P-3. The outlook on all ratings is stable, a release issued by the international credit rating agency said.
These ratings take into consideration Exim Bank India's stand-alone credit assessment of ba2, and Moody’s assessment of a very high dependence and a high support probability from the Indian Government. The stand-alone credit profile reflects the bank's adequate liquidity management with minor mismatch in maturity between its assets and liabilities, ongoing capital support from the Indian Government as a shareholder, and improving profitability, it said. Moody's analysis also considers the marginal deterioration on Exim Bank India's asset quality with increase in gross non-performing loans (NPLs) as a percentage of gross loans to 1.46 per cent as of March 2012 vis-a-vis 1.04 per cent at end March 2011.
Similarly, restructured loans increased to Rs 812 crore (1.48 per cent of gross loans) from Rs 230 crore (0.5 per cent of gross loans) over the same period. NPL provision coverage is over 80 per cent.
“With nearly 45 per cent of loan exposures in the form of interbank exposure and lines of credit carrying Indian government guarantee, and the balance of 55 per cent as direct export development loans linked to domestic companies, we expect asset quality of Exim Bank India to continue compare better to other Indian banks”, the release said.
Furthermore, Exim Bank does not have exposure to the troubled sectors in India of airline, power distribution and telecom, which have been a source of asset quality challenges at other Indian banks, lending support to its asset quality.
“Our expectation of a high support probability is based on the bank’s strong linkage with the government, including its establishment under a law designating its quasi-sovereign status, government ownership and clear policy role as an export credit agency”, the release added.