MUMBAI: S&P Global Ratings lowered its long-term credit rating for Bank of India (BOI) to BB+ from BBB- and IDBI Bank to BB- from BB. The outlook on the long-term rating for both banks is stable.
“We downgraded BOI because we expect the bank’s asset quality to remain weak over the next 12 months, following a recent deterioration,” said S&P Global Ratings credit analyst Amit Pandey.
BOI has sizable exposure to the infrastructure and metal sectors, which S&P views as having high risk.
BOI’s non-performing assets have increased more than 100% year-on-year by the end of March 2016, one of the highest among the peer banks that we rate in India, the agency observed.
On IDBI Bank, Pandey said, “We affirmed the rating to reflect our expectation that the likelihood of support to IDBI from the government of India will remain very high… At the same time, we have lowered our assessment of IDBI’s because we expect the bank’s asset quality to remain weak over the next 12 months.”
S&P expects IDBI to sustain the improvement in its business profile and funding position, although we continue to see downward pressure on the bank’s asset quality. It also affirmed BB+’ long-term and ‘B’ short-term foreign currency issuer credit ratings for IDBI Bank.