ICRA reaffirms AAA stable for Axis Bank's infra bonds, debentures
Feb 20, 2021
New Delhi [India], Feb 20 : ICRA has reaffirmed AAA rating on Axis Bank's infrastructure bonds and debentures worth Rs 22,205 crore.
At the same time, it has reaffirmed A1-plus rating on the private lender's certificates of deposit worth Rs 60,000 crore.
The highest credit quality ratings to Axis Bank's debt instruments are supported by its strong capitalisation levels with core equity capital at 15.36 per cent as on December 31, 2020.
This was supported by equity capital raise in August 2020, resulting in a further improvement in capital cushions over regulatory requirements.
"The ratings continue to factor in Axis Bank's strong position in Indian financial system as the third-largest private bank with 6.03 per cent share in advances and 4.66 per cent share in deposits of banking system as on September 30, 2020," said ICRA.
The bank's liability profile continues to improve with higher granularity of deposits profile supported by increasing share of retail term deposits and current account and savings account (CASA) deposits in total deposits.
This has also supported the improvement in Axis Bank's liquidity profile with lower gaps in the maturity of assets and liabilities in one-year maturity buckets.
The asset quality pressure remains high with fresh gross slippages of 2.5 per cent (of standard advances and including proforma slippages) in 9M FY21 and remains a monitorable, given the uncertainty because of Covid-19-induced stress.
While the impact of Covid-19 pandemic on loan portfolio is gradually emerging, the restructuring extended to borrowers has been limited and prudent provisions made by the bank at 2.05 per cent of advances as on December 31, 2020.
ICRA said the bank appears to be well placed to absorb residual stress through its operating portability and voluntary provisions while maintaining a strong capital position.
The stable outlook on ratings reflects ICRA's opinion that the bank will continue to maintain its strong capital and solvency position along with its strong position in banking sector with a consistent improvement in customer franchise and an expected improvement in profitability.
Axis Bank is the third-largest private bank and seventh-largest bank in the overall Indian banking sector. In 9M FY1, it reported a net profit of Rs 3,911 crore compared to Rs 3,015 crore in 9M FY20.
