ICRA assigns LAAA rating to bond prog of Corporation Bank

New Delhi, Mar 28 (UNI) Credit rating agency ICRA has assigned LAAA rating for the Rs 500 crore subordinated debt (Lower Tier II) programme of Corporation Bank (CB), indicating highest credit quality.

The rated instruments carry lowest credit risk.

The highest safety rating reflects the majority government ownership, strong capitalisation levels, sound financials, healthy asset quality indicators and CB's proactive IT initiative. The financials of CB is characterised by stable and improving interest margin, operating profitability and lower slippages. The assigned rating also takes into account the wide branch and ATM network of CB that enables it to compete effectively with large sized banks in sourcing low cost deposits.

Corporation Bank's ATM franchises, 837 in number as on December 31, 2005, is the second largest among PSU banks.

While ICRA recognises the negative impact that increasing interest rate can have on the bank's high duration held to maturity investments, it draws comfort from the unrealised gain in the trading portfolio of the bank.

ICRA also views the low return on networth of Corporation Bank as a result of the bank's conservative leverage. Overall, the highest safety rating for the bank draws comfort from its majority government ownership, its strong capitalisation and its sound financials.

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