Global rating agency Moody’s on Thursday affirmed private sector lender IndusInd Bank’s Ba1 long-term (LT) foreign and local currency bank deposit and issuer ratings. Moody's also upgraded the bank's Baseline Credit Assessment (BCA). The agency maintained a stable outlook on the ratings.
“Today's rating action reflects IndusInd's improved financial metrics and our view that India's strong operating environment will continue to support the bank's credit fundamentals over the next 12-18 months,” the agency said. “IndusInd's profitability has improved, supported by lower credit costs and stable net interest margin, while its asset quality is stable and its strong capital remains a key credit strength.”
While the management's push toward increasing its sticky retail deposits has improved its funding, an increase in systemwide funding costs will lead to some moderation in profitability over the next 12-18 months, Moody’s said.
IndusInd's Core Equity Tier 1 ratio was stable at 15.8% as of 31 March 2024 compared to the same period a year ago. Moody’s forecasted that the bank will grow its loans faster than the industry at around 15%-20% in the fiscal year ending March 2025.
IndusInd's asset quality has also improved, with its net nonperforming loan (NPL) formation declining amid favorable economic conditions. Despite a likely gradual increase in new NPL formation as loan season, the bank's de-risking efforts, including its lowering of its loan concentration to large borrower groups, will help prevent a weakening in its asset quality, Moody’s said.
The agency said that the lender’s funding and liquidity will remain stable over the next 12-18 months.
“IndusInd's funding has improved, with its share of deposits from retail and small businesses increasing, while the bank has maintained strong access to borrowings from Indian and international multilateral agencies,” it said.
Moody’s said that it could upgrade the ratings further if the bank demonstrates sustained improvement in its funding quality.
“This would be indicated by an increased proportion of its retail deposits, a reduced reliance on wholesale deposits and market funds, and a decrease in its deposit costs in line with its larger Indian peers,” it said.
The agency could downgrade the bank if asset quality materially deteriorates, leading to an erosion of its profitability and capitalization.
FAQs
Baseline Credit Assessment. A measure of default probability excluding external support.
What does stable outlook mean in credit rating? ›
» A “Stable” outlook indicates a low likelihood of rating change in the near to medium term. » A “Positive” outlook indicates a high likelihood of an upward rating revision in the near to medium term. » A “Negative” outlook indicates a high likelihood of a downward rating revision in the near to medium term.
What is moody credit rating scale? ›
Moody's long-term ratings. The scale for long-term fixed rate obligations with a maturity of one year or more runs from Aaa to C. Investment grade: Aaa, Aa1, Aa2, Aa3, A1, A2, A3, Baa1, Baa2, Baa3 (from highest quality with minimal credit risk to medium grade with moderate credit risk).
What is the rating of Indusind Bank? ›
Note on complexity levels of the rated instrument:
| Current | 2021 |
---|
| | CRISIL A1+ |
Infrastructure Bonds | LT | CRISIL AA+/Stable |
| | CRISIL AA+/Stable |
Short Term Fixed Deposit Programme | ST | CRISIL A1+ |
6 more rowsJul 25, 2024
What is your baseline credit score? ›
The base credit scores of the most popular credit-reporting models start at 300. Starting with a score of around 300 is possible only if you've managed your finances poorly. You may start to build a credit history or improve your score without using any type of credit.
What is Moody's rating assessment? ›
Moody's RAS helps issuers assess a hypothetical transaction's credit effects and its ratings implications. RAS is point-in-time, written feedback reflecting a Moody's rating committee view on the likely rating impact of future hypothetical transactions.
Is it good to have a stable credit score? ›
A higher score means lenders see you as lower risk. So, a good score will be good news if you're hoping to get a new credit card, apply for a loan, or even a mortgage.
How much is a stable credit score? ›
For a score with a range between 300 and 850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most consumers have credit scores that fall between 600 and 750.
What does a stable credit rating mean? ›
For example, Moody's designates an Outlook for a given rating as Positive (POS, likely to upgrade), Negative (NEG, likely to downgrade), Stable (STA, likely to remain unchanged), or Developing (DEV, contingent on some future event).
Is a 900 credit score possible? ›
While achieving a CIBIL Score of 900 is technically possible, it is extremely rare. Scores above 760 are considered very good or exceptional, providing significant benefits such as lower interest rates and higher chances of loan approval.
Much of the innovation in Moody's rating system has been in response to market needs for increased clarity around the components of credit risk or for finer distinctions in rating classifications. Aaa Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.
What does negative outlook mean on Moody's? ›
Negative Outlook means that Moody's has indicated that its rating of the Security Issuer may be lowered over the intermediate to longer term.
Is IndusInd Bank stable? ›
“IndusInd's profitability has improved, supported by lower credit costs and stable net interest margin, while its asset quality is stable and its strong capital remains a key credit strength.”
Is IndusInd Bank good or bad? ›
Both Federal Bank and IndusInd Bank are good private sector banks with a strong track record of growth. However, the Federal Bank has a more conservative approach to lending and has better asset quality than IndusInd Bank.
Why is IndusInd Bank falling? ›
IndusInd in focus: Shares of IndusInd Bank hit a 52-week low at Rs 1,347.85 on the BSE in Wednesday's intra-day trade in otherwise a firm market as the bank's June quarter (Q1FY25) earnings fell short of expectations due to increased provisions for the quarter.
What is the purpose of a credit assessment? ›
A credit assessment, also known as a credit check, is used to assess the solvency of companies and individuals. Usually, consumers are subject to checks when applying for a loan or to pay for purchases in instalments.
What is a credit rating assessment? ›
A credit rating is an independent assessment of the ability of a corporation or a government to repay a debt, either in general terms or regarding a specific financial obligation. Credit scores are assigned to individuals based on their personal history of acquiring and repaying debt.
What are the criteria for credit assessment? ›
The four main components of a credit assessment are credit history, capacity, collateral, and conditions. Each of these components is important in determining the overall creditworthiness of a borrower.
What is credit score assessment? ›
Credit scoring is a systematic and statistical method used by financial institutions to assess the creditworthiness of individuals or businesses seeking financial products, such as loans or credit cards.