Ind-Ra upgrades IDBI Bank's rating

India Ratings (Ind-Ra) has upgraded IDBI Bank Limited's (IDBI) Long-Term Issuer Rating to 'IND A+' from 'IND A' and its Short-Term Issuer Rating to 'IND A1+' from 'IND A1' vide their report dated July 25, 2022.

The upgrade reflects the bank's enhanced capital levels, negligible need to provide for legacy gross non-performing advances (NPAs), manageable impact of COVID-19, improved deposit profile, and Ind-Ra's continued expectations of the bank maintaining enhanced operating buffers and profitability. These factors also provide the bank with the ability to maintain its market share in advances and deposits while keeping higher-than-adequate capital levels. While IDBI is a mid-sized bank and among the largest in A category peers, the ratings are constrained by the lack of a large asset and liability niche to focus on and the impending strategic divestment by two of its promoters - Life Insurance Corporation of India Ltd (LIC) and the government of India (GoI). Ind-Ra expects synergy building with LIC to be put on the backburner, given the impending strategic divestment plans.

Ind-Ra opines the bank now, irrespective of timing of strategic sale, would continue to focus on retail loans and fomenting newer corporate relationships. While it could face challenges in maintaining its deposit profile in a rising rate environment, Ind-Ra does not expect the bank to need material incremental capital to deliver balance sheet growth in the near term.

Shares of IDBI Bank Limited was last trading in BSE at Rs. 35.20 as compared to the previous close of Rs. 36.65. The total number of shares traded during the day was 870971 in over 3053 trades.

The stock hit an intraday high of Rs. 36.60 and intraday low of 34.90. The net turnover during the day was Rs. 30918629.00.

Source : Equity Bulls

Keywords

IDBIBank INE008A01015 RatingUpgrade