ICRA assigns LA rating to IndusInd Bank's Rs 150 cr Tier II bonds

New Delhi, Mar 29 (UNI) Rating agency ICRA has assigned an LA rating to IndusInd Bank's Rs 150 crore Upper Tier II Bonds.

IndusInd Bank has an outstanding ICRA rating of LA+ for its Rs 322 crore subordinated bonds. The rating indicates adequate credit quality rating assigned by ICRA.

The rated instrument carries average credit risk. The one notch lower rating assigned to the Upper Tier II bonds reflect the specific features of these instruments wherein the debt servicing is additionally linked to meeting the regulatory norms on capitalisation and reported profitability.

The domestic regulatory norms for hybrid debt capital instruments need regulatory approvals from the Reserve Bank of India for debt servicing (including principal repayments) in case the bank were to report a loss and are not liable to service the debt.

The rating also takes into account the improving asset quality of IndusInd. While profitability from core banking operations has shown an upward trend, ICRA expects the margins to be under pressure in the near term, especially with the firming of interest rates.

IndusInd's ability to leverage on the erstwhile ALFL franchise and distribution network to reduce its deposit cost will continue to be a critical determinant of future credit quality.

UNI SS SD DS1642