Further, Brickwork reaffirms the rating of Tier-II bonds (Basel III) of Rs2500cr to 'BWR AA+' and reaffirms the rating of Additional Tier-I bonds (Basel III) of Rs4500cr of Union Bank of India.
The Outlook is revised to Stable.
The rating assignment/reaffirmation for the aforesaid bond issues of Union Bank of India factors in the continued strong support from the Government of India (GoI), substantial business size and asset size since the amalgamation, comfortable capitalisation and resource profile as of 30 June 2021.
The outlook on the AT-1 Bonds ( under Basel III) was revised from Negative to Stable. The Bank’s capital adequacy ratios have strengthened as of 30 June 2021. The Bank’s CET I ratio was at 1.77% above the regulatory requirement and the Tier I ratio was at 1.59% above the minimum regulatory requirement.
The bank will maintain these comfortable capital adequacy ratios going forward. The impact of asset quality and profitability in the event of lower collections and recoveries over the medium term shall remain a monitorable.
BWR believes Union Bank of India’s business risk profile will be maintained over the medium term. The Stable outlook indicates a low likelihood of a rating change over the medium term.
On Tuesday, Union Bank of India ended at Rs37.10 apiece down by Rs0.5 or 1.33% on Sensex.