IAS Prelims and Mains New Batch starts from September 20th 2018 & KAS prelims & Mains New batch starts from 27th September 2018 - For registration Contact: 9686664983/9845512052.

Moody’s upgrades outlook on IDBI Bank to positive on recap

Moody’s upgrades outlook on IDBI Bank to positive on recap

Context:

Moody’s Investors Service on 27th february 2018 affirmed the long-term local and foreign currency bank deposit rating of IDBI Bank at B1 and changed the outlook to positive from stable.

Significance:

  • “The positive outlook reflects the upward pressure that could develop on the bank’s long-term rating, if its credit fundamentals -- such as capital position -- continues to improve over the next 12-18 months due to capital infusion
  • The positive outlook also factors in the rating agency’s view on the expected evolution of the bank’s balance sheet, including a stabilisation in asset quality and continued stable funding and liquidity positions.
  • Under the recapitalisation plan, the bank will get Rs 7,881 crore in new capital by March. The rating agency said this capital infusion will increase the common equity tier-1 (CET1) ratio for the bank to about 9.8 per cent based on the risk-weighted assets as of December 2017.
  • The bank will continue to report losses over the next few quarters on account of high provisioning charges, eroding this capital level.
  • The rating agency expects that the CET1 ratio as of March 2019 will meet the minimum Basel-III capital needs.
  • The bank’s gross NPA ratio declined to 24.7 per cent from the high of 25 per cent in the quarter ended September 2017, while net NPA ratio stabilised at 14.3 per cent compared again with the previous quarter.

Know about MOody's service:

 

Comment