ICICI Bank outlook to stable from negative
ICICI Bank global ratings have been revised by S&P Global Ratings. The agency said “We revised the rating outlook to reflect our view that ICICI Bank will maintain its strong capital position over the next 24 months. The bank will benefit from the sale of a stake in subsidiaries and gradual normalization of earnings, which should reduce risks associated with its capital position,”
ICICI Bank will maintain a risk-adjusted capital (RAC) ratio of more than 10 per cent over the next 24 months, the S&P forecasted this statement. It also further added that Our expectation factors in 13-14 per cent credit growth for the bank, an improvement in earnings, and sale of a stake in insurance subsidiaries over the period,”
The Stressed Loans of ICICI Bank likely to remain high when compared to that of international peers. The stressed loans of the bank is expected to peak at 6 per cent of total loans in the fiscal year ending March 2022, lower than the estimate of 11-12 per cent for the Indian banking industry.
It also further said that “The bank’s new non-performing loans (NPLs) are likely to stay elevated in fiscal 2022 owing to the impact of the second wave of COVID-19 infections. In our view, localized lockdowns will hit small and midsize enterprise (SME) borrowers the most.”
SME loans (accounting for 4.2 per cent of total loans), personal loans (6.7 per cent), credit cards (2.4 per cent) and rural loans (10 per cent) could contribute to the increase in NPLs for ICICI Bank.
It said, “estimated core earnings at 1.3-1.6 per cent of assets over the next two years, with further upside possible from the sale of a stake in subsidiaries.”
ICICI Bank will maintain its strong market position, strong capital, better-than-system asset quality, and good funding for the next 24 months.