Icra downgrades IDBI ratings

By Our Banking Bureau | 16 Oct 2001

1

Mumbai: Credit rating agency Icra has downgraded the Industrial Development Bank of Indias (IDBI) long- and medium-term ratings. The long- and medium-term ratings, which were LAAA and MAAA respectively, indicating highest safety, have been downgraded to LAA+ and MAA+ respectively. The new ratings indicate high safety with relatively higher standing within the category.

IDBIs short-term rating of A1+, which means highest safety with relatively higher standing within the category, has been however reaffirmed.

Icra has pointed out that the downgrades reflect concerns over IDBIs asset quality and pressures on profitability. IDBIs net non-performing assets increased to Rs 8,371 crore as on 31 March 2001 as compared to Rs 7,675 crore as on 31 March 2000. In percentage terms, the non-performing assets increased from 13.40 per cent in 2000 to 14.82 per cent in 2001.

While revising the ratings, Icra said it had factored in IDBIs vulnerable asset quality, primarily attributable to significant exposures in various commodity sectors like steel, textiles and chemicals. Delayed economic recovery and sustained pressure on commodity prices could impair IDBIs asset quality further, Icra said.

 

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