The Federal Bank Ltd – Rating reaffirmed to ‘CRISIL A1+’, rated amount improved for certificates of deposit



CRISIL Ratings has reaffirmed its “CRISIL A1+” rating on The Federal Bank Limited’s short-term debt programs.

The rating continues to reflect the bank’s comfortable capitalization, healthy resource profile and strong brand among Non-Resident Indians (NRIs). These strengths are partially offset by average profitability, although improving, a relatively modest operating size and geographical concentration.

Asset quality has improved steadily after the one inch rise seen during the pandemic. Gross Non-Performing Assets (GNPA) improved to 2.78% as of March 31, 2022 from 3.35% as of March 31, 2021 and 2.67% as of June 30, 2022. This was supported by lower slippages and recoveries, except for the sale of Rs 275 crore to an asset reconstruction company, which positively impacted GNPAs by 18 basis points. The corporate segment’s asset quality (35% of the loan portfolio) improved the most, with the segment’s GPA declining to 0.9% as of March 31, 2022, from 2.1% a year ago.

The bank had 2.2% (Rs 3,366 crore) of its loan portfolio as the standard restructured portfolio as of June 30, 2022, the majority of which was retail and secured. While the majority of the restructured portfolio is well secured, its performance and overall asset quality will remain controllable.

Source: Stock market bulls

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