Mumbai, Dec. 15
INTERNATIONAL rating agency Fitch Ratings upgraded individual ratings for ICICI Bank and State Bank of India to `C' from `C/D'.
The rating agency also affirmed other ratings of both banks at long-term foreign currency `BB+', short-term foreign currency `B', national long-term `AAA (ind)' and support `3'.
The outlook on the ratings is stable for both banks, a press release from the agency said.
According to Fitch, the individual rating for SBI recognises the considerable progress the bank has achieved in strengthening its balance sheet and reflects a significant improvement in its asset quality and solvency indicators such as net non-performing loan (NPL) to loan ratio, compared with that two to three years ago.
SBI's recent push into consumer banking, which now is at 25 per cent of total loans, has also diversified its loan book from a predominant corporate exposure previously.
The focus on the consumer segment also opens up new opportunities for cross-selling, which should help the bank further improve its fee income.
In the case of ICICI Bank, Fitch said the upgrade of the individual rating reflected the bank's improved financial condition over the past two to three years, particularly when compared with ICICI Ltd, primarily a project financing institution at that time.
At the same time, the rating agency also expressed some concerns on the bank's explosive growth in consumer loans, which have increased 10-fold during the last three years and constituted about 63 per cent of total loans as on June 2005.
However, such risks are somewhat reduced due to the continued low levels of penetration in the consumer banking sector in India, the fact that more than 90 per cent of ICICI's consumer assets are secured and that the buoyant economic conditions in India appear to continue for at least another one to two years, the release said.