Moody's affirms Axis Bank's Baa3 deposit ratings; stock surges over 2%

21 Jun 2022 , 02:19 PM

Moody’s has affirmed the Baa3 deposit ratings of Axis Bank Ltd. (Axis). At the same time, Moody’s has upgraded banks’ baseline credit assessments (BCA) from baa1 to baa3, indicating that credit fundamentals, particularly asset quality, have improved.

Because deposit ratings are already at the same level as the Indian sovereign rating, the upgrade of the BCAs has no effect on deposit ratings (Baa3 stable).

The preferred stock non-cumulative bond rating of Axis Bank Limited, GIFT City Branch has been upgraded to Ba3(hyb) from B1(hyb), owing to the BCA upgrading.

Rating outlook for the bank, if relevant, is stable. Strong solvency measures restrict downside risks, and upgrades are unlikely, provided ratings are currently at the same level as the sovereign.

Moody’s stated in its rating rationale, that Axis Bank’s asset quality has improved noticeably, with both gross and net non-performing loan (NPL) ratios falling. At the same time, that provision coverage has expanded, credit prices have decreased. Higher profitability has resulted from lower credit costs.

At around 2.21 PM, Axis Bank was trading at Rs641.40 up by Rs13.4 or 2.13% from its previous closing of Rs628 on the BSE.