Fitch revised Andhra Bank's outlook to negative.
Meanwhile it affimed the bank's National Long-Term rating at 'Fitch AA+(ind)' and National Short-Term rating at 'Fitch A1+(ind)'.
The rating on AB's lower tier 2 subordinated bonds is consistent with the approach taken for other similar performing securities based on Fitch's criteria. A full rating breakdown is provided below.
The Outlook revision reflects Fitch's concerns on AB's significantly deteriorated asset quality following its migration to system-generated non-performing loans and on its corporate loan book where concentration risk to certain structurally weak sectors, such as power, state electricity boards, iron and steel, has considerably grown in the last 18 months.
This could pose future asset quality challenges though sector-specific NPL ratios remain low - also partly due to restructuring. That being said, AB's ability to manage asset quality has been its important credit strength in the past, even offsetting structural issues such as regional concentration and high dependence on wholesale deposits.
Do you know more about this story? Contact us anonymously through this link.