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Rating agency Moody’s, on Tuesday, affirmed IndusInd Bank’s ratings, but changed its outlook to negative due to concerns over asset quality. “Moody’s Investors Service has affirmed IndusInd Bank’s domestic and foreign currency issuer ratings of Baa3/P-3,” it said in a statement, adding that it has changed its outlook, where applicable, to negative from stable.
Moody’s said the rating affirmation is driven by the private sector lender’s strong buffers, both capital and profitability, which resulted in its strong ability to absorb asset quality stress as well as moderate, although improving, funding profile. Moody’s attributed the revised outlook to account for the risk of further asset quality deterioration.
“Over the last few quarters, the bank has seen a deterioration in its asset quality, particularly in the corporate segment. Tight refinancing conditions for borrowers were a key trigger for the crystallisation of non-performing loans (NPLs),” it said, adding that the bank could also be negatively impacted by the ongoing stress in the telecommunications sector.
Given that the outlook is negative, it is unlikely that Moody’s will upgrade the bank’s ratings over the next 12 to 18 months.
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