Axis Bank Clarifies Downgrade By S&P Is An Editorial Error
Money & Banking
Axis Bank on Saturday clarified that global rating agency Standard and Poor had made an error by inadvertently mentioning that the bank was on CreditWatch and that it is on Stable outlook.
The private sector lender in a notification to stock exchanges had clarified that S&P had made an editorial error.
“As confirmed by S&P, the rating report inadvertently mentions the bank being on CreditWatch. In this regard, S&P has confirmed that it is an editorial error and bank is on STABLE outlook,” the bank said.
As per the rating action letter by S&P Global Ratings Axis Bank’s current issuer ratings stands at BB+/Stable/B from previous BBB-/Negative/A-3 rating.
The stable rating had been given considering that the bank must have factored in the deterioration in its asset quality over the next 12 months, the rating agency stated.
“We lowered our ratings on Axis to reflect our expectation that heightened economic risks facing India's banking system will affect the bank's asset quality and financial performance. While Axis' asset quality is superior to the Indian banking sector average, its level of non-performing assets (NPAs) will likely remain high compared to international peers',” reads the S&P letter.
“Nevertheless, we expect the bank to maintain its strong market position and adequate capitalization. The stable outlook reflects our view that our ratings on Axis already factor in some deterioration in the bank's asset quality and performance over the next 12 months,” it said.
It could upgrade or downgrade the ratings of the bank based on its future performance, the letter added.
“We could lower the ratings on Axis if the bank's stressed assets rise significantly beyond the system average over the next few quarters. We could raise our ratings on Axis if the bank's performance, particularly its asset quality, is significantly superior to that of domestic peers and commensurate with international peers' over the next 18 months,” it said.
S&P had recently downgraded the ratings of Axis Bank along with four Indian non-bank financiers (NBFC)s stating that the increased risks posed by the Covid-19 pandemic will worsen operating conditions.
“We expect a recession to hurt the financial sector,” it said in a release.
Published on
June 28, 2020
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Axis Bank on Saturday clarified that global rating agency Standard and Poor had made an error by inadvertently mentioning that the bank was on CreditWatch and that it is on Stable outlook.
The private sector lender in a notification to stock exchanges had clarified that S&P had made an editorial error.
“As confirmed by S&P, the rating report inadvertently mentions the bank being on CreditWatch. In this regard, S&P has confirmed that it is an editorial error and bank is on STABLE outlook,” the bank said.
As per the rating action letter by S&P Global Ratings Axis Bank’s current issuer ratings stands at BB+/Stable/B from previous BBB-/Negative/A-3 rating.
The stable rating had been given considering that the bank must have factored in the deterioration in its asset quality over the next 12 months, the rating agency stated.
“We lowered our ratings on Axis to reflect our expectation that heightened economic risks facing India's banking system will affect the bank's asset quality and financial performance. While Axis' asset quality is superior to the Indian banking sector average, its level of non-performing assets (NPAs) will likely remain high compared to international peers',” reads the S&P letter.
“Nevertheless, we expect the bank to maintain its strong market position and adequate capitalization. The stable outlook reflects our view that our ratings on Axis already factor in some deterioration in the bank's asset quality and performance over the next 12 months,” it said.
It could upgrade or downgrade the ratings of the bank based on its future performance, the letter added.
“We could lower the ratings on Axis if the bank's stressed assets rise significantly beyond the system average over the next few quarters. We could raise our ratings on Axis if the bank's performance, particularly its asset quality, is significantly superior to that of domestic peers and commensurate with international peers' over the next 18 months,” it said.
S&P had recently downgraded the ratings of Axis Bank along with four Indian non-bank financiers (NBFC)s stating that the increased risks posed by the Covid-19 pandemic will worsen operating conditions.
“We expect a recession to hurt the financial sector,” it said in a release.
Published on
A letter from the Editor
Dear Readers,
The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill.
In these difficult times, we, at BusinessLine, are trying our best to ensure the newspaper reaches your hands every day. You can also access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute.
But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.
I appeal to all our readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. You can help us by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section.
Our subscriptions start as low as Rs 199/- per month. A yearly package costs just Rs. 999 – a mere Rs 2.75 per day, less than a third the price of a cup of roadside chai..
A little help from you can make a huge difference to the cause of quality journalism!
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