Fitch downgrades Vijaya Bank's long-term rating
Quotes

Fitch downgrades Vijaya Bank's long-term rating

Last Updated: Thursday, May 31, 2012, 08:46
 
 Comment 0
 
Fitch downgrades Vijaya Bank's long-term rating
Bangalore: Fitch Ratings has downgraded state-run Vijaya Bank's national Long-Term (LT) rating to 'Fitch AA-(ind)' from 'Fitch AA(ind)'.

However, the bank's outlook is stable, the rating agency said.

Fitch has also downgraded Vijaya Bank's Rs 900 crore lower tier-2 subordinated debt to 'Fitch AA-(ind)' from 'Fitch AA(ind)' and its Rs 600 crore upper tier 2 subordinated debt to 'Fitch A-(ind)' from 'Fitch AA-(ind)', a statement said.

The downgrade reflects continued deterioration in Vijaya's funding profile, which is weak compared to most Indian government banks, it said.

The ratings also reflect Fitch's expectations of continued weakening in the bank's asset quality and moderate capitalisation, it added.

Fitch noted that Vijaya Bank's proportion of stressed assets rose sharply in FY12 to 8 percent from 5 percent in FY11, with non-performing loans (NPLs) increasing to 2.93 percent (FY11: 2.56 percent) and 2.6 percent of loans were restructured during the year.

The proportion of stressed assets may rise further in view of bank's high exposure to troubled sectors such as power generation, electricity distribution companies, roads and ports, commercial real estate and iron and steel, Fitch said.

The agency also noted that the bank's provision coverage on NPLs (FY12: 41.9 percent) is low and inadequate to absorb increased losses, especially when its restructured assets attract only 2 percent provisioning.

PTI



First Published: Thursday, May 31, 2012, 08:46


Comments


comments powered by Disqus
Google I/O 2014
Google I/O 2014
Maker Faire @ White House
Maker Faire @ White House
Amazon unveils 3D `Fire` smartphone
Amazon unveils 3D `Fire` smartphone
RIL`s 40th AGM
RIL`s 40th AGM
Samsung Galaxy Tab S
Samsung Galaxy Tab S

Web Wrap
Contact Us : Privacy Policy : Legal Disclaimer
Copyright © Zee Media Corporation Ltd. All rights reserved