New Delhi: Global credit ratings firm Moody's downgraded the country's three largest private sector lenders. As a result, the hybrid debt ratings of these banks, except HDFC Bank, will be negatively impacted.
The standalone bank financial strength rating (BFSR) of ICICI, HDFC and Axis are revised down to D+ from C-, which now maps to a baseline credit assessment (BCA) of Baa3 from Baa2 on the long-term scale, Moody's Investors Service said in a statement issued in Singapore.
The agency also downgraded the hybrid ratings of Axis Bank and ICICI Bank to Ba3 from Ba2. But it said all the revised ratings carry stable outlooks.
"The rating action follows in the context of the ongoing global review affecting all banks whose standalone ratings are higher than the rating of the government where they are domiciled, and they conclude the review that was initiated on April 30, 2012," Moody's Investors Service vice-president and senior credit officer at financial institutions group, Beatrice Woo, said in the statement.
The affected banks downplayed the rating action, saying this is in line with the sovereign rating and does not in any new way negatively reflect their credit standing.
Moody's also said the other ratings of these banks are unaffected and have stable outlooks as detailed below.
"Our review indicates that there are little reasons to believe that these banks will be insulated from a government debt crisis. More particularly, we note their significant direct exposure to the government securities, equivalent to 239 per cent of tier 1 at Axis Bank, 226 per cent of tier 1 at HDFC Bank and 143 per cent of tier 1 capital at ICICI Bank (based on latest publicly available data).
"In addition, these banks are primarily domestic institutions with similar macroeconomic exposures as the sovereign government. Therefore, we view the lower standalone ratings -- which are now positioned at the rating of the government -- as more appropriate to capture the credit profiles of the banks," Wood said in the statement.
Source: PTI
