S&P upgrades Axis Bank rating on improving asset quality
The Hindu
‘Bank’s nonperforming loans could decline’
S&P Global Ratings on Tuesday lifted its credit rating on Axis Bank with a ‘stable’ outlook on expectation that the private sector lender would maintain good asset quality over the next two years.
The U.S.-based agency said India's robust economic growth should support borrowers' creditworthiness and Axis Bank's weak loans, or nonperforming loans, could decline to 2.5-3% of total loans by end-March 2023, from 3.7% as of March 31, 2022.
Axis Bank can absorb the impact of higher inflation and interest rates, S&P said.
The long-term and short-term issuer credit rating on Axis Bank has been raised to 'BBB-/A-3' from 'BB+/B'.
The outlook on the long-term rating is stable. The long-term issue rating on the bank's senior unsecured notes has been raised to 'BBB-' from 'BB+'.
"The stable outlook reflects the bank's strong market position, ample capital buffers, and stable deposit base. Axis Bank should be able to maintain its good asset quality, supported by stable macroeconomic conditions in India and the bank's well-developed risk management," S&P said.
The agency said that the small and midsize enterprise sector and low-income households are vulnerable to rising interest rates and high inflation. However, in the case of moderate interest-rate increases, these risks are manageable for Axis Bank.
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