Mumbai, Feb. 5: Moody’s Investors Service today upgraded the foreign currency deposit rating of nine banks, debt rating of two financial institutions and the Resurgent India Bonds (RIBs) of the State Bank of India (SBI).
The good news comes two days after the international rating agency upgraded India’s foreign currency rating by a notch due to improvement in its external liquidity position.
Moody’s said that it has upgraded foreign currency bank deposits of Bank of Baroda, Bank of India, Canara Bank, Central Bank of India, ICICI Bank Ltd, Oriental Bank of Commerce, Punjab National Bank, SBI and Union Bank of India to Ba2 with negative outlook from Ba3.
The international credit rating agency added that the foreign currency debt ratings of Industrial Development Bank of India (IDBI) and Power Finance Corporation (PFC) have also been upgraded to Ba1 from Ba2. On the other hand, State Bank of India’s Resurgent India Bonds have been upgraded to Ba2 with negative outlook from Ba3.
Significantly, Moody’s has kept the debt rating of ICICI Bank on review for possible upgrade. It may be recalled that the bank’s rating had pierced India's country ceiling for foreign currency debt prior to the reverse merger of ICICI and ICICI Bank that created the second largest bank in the country.
Moody’s here added that the review is focused on the progress that has been made on further integration of the bank’s business with the financial institution, while pointing out that the foreign currency subordinated debt rating of ICICI Bank remained on review for possible upgrade.
It disclosed that the foreign currency issuer rating of IFCI has been upgraded to Ba1 from Ba2.
The ratings are all raised to the corresponding rating ceiling for foreign currency deposits, debt and issuer ratings in India, with the exception of SBI’s foreign currency debt rating that refers to the RIBs.
Although deposit ratings of some banks are constrained by the country ratings ceilings, other weaker public sector institutions are pulled to the ceiling based on support from the government, Moody’s said.
The foreign currency deposit ratings of Central Bank of India and Union Bank of India, the debt rating of IDBI and the issuer rating of IFCI all impute government support, it added.
“This is based on our belief that the government maintains its willingness to support the foreign currency obligations of the banks and financial institutions in case of need,” it stated.
Indian Bank operating profit
The public sector Indian Bank, currently on course for a major financial restructuring with recapitalisation assistance from the Centre, posted an operating profit of Rs 370.10 crore in the nine months ended December 31, showing an increase of about 220 per cent over the same period in 2001.
The total business of the bank grew by 13.84 per cent during the period to touch Rs 37,752 crore, Ranjana Kumar, chairperson and managing director of the bank told newspersons here today.
Cost of deposits (domestic) was reduced substantially by 1.05 per cent to 6.71 per cent for December 2002 from 7.6 per cent for December 2001, she said.
Gross NPA of the bank had been brought down to 6.77 per cent of gross credit as on December 31 last from 17.85 per cent as of March 31,2002.