CRISIL revises AU Small Finance Bank outlook to ‘Positive’, reaffirms ratings

The rating of the fixed deposit programme and long-term debt instruments have been reaffirmed at 'FAA+' and 'CRISIL AA-' respectively.

Nov 25, 2021 10:11 IST India Infoline News Service

AU Small Finance Bank
CRISIL Ratings has revised its rating outlook on the fixed deposit programme and long-term debt instruments of AU Small Finance Bank Limited to 'Positive' from 'Stable'.

The rating of the fixed deposit programme and long-term debt instruments have been reaffirmed at 'FAA+' and 'CRISIL AA-' respectively. The short-term rating on the certificate of deposits programme has been reaffirmed at 'CRISIL Al+'

At around 10.07 am, AU Small Finance Bank Ltd was trading at Rs1,194 per piece down by Rs10.9 or 0.9% from its previous closing of Rs1,204.90 per piece on the BSE.

“CRISIL Ratings has revised its rating outlook on the long-term debt instruments and fixed deposit programme of AU Small Finance Bank Limited (AU SFB) to ‘Positive’ from ‘Stable’ while reaffirming the rating at ‘CRISIL AA-/FAA+’. The short term rating on certificate of deposits programme has been reaffirmed at ‘CRISIL A1+’,” company shared CRISIL’s rating rationale.

It further said, the revision in outlook is driven by the consistency in bank’s overall performance over the last few years as evidenced by stable asset quality and earnings profile despite pandemic induced challenges, and improving liability profile.

The bank has demonstrated its ability to manage its asset quality in the post-Covid scenario and maintain non-performing assets (NPAs) at a level which is lower than peers. Over this period, the bank has also maintained its profitability metrics reflected in the return on managed assets (RoMA) remaining at 1.2% and above levels despite heightened provisioning requirement.

There has been a sustained improvement in the bank’s overall liability profile marked by increasing share of deposits in the overall external liabilities and, continued ramp up in retail deposit franchise. This also factors in the gradual increase in the share of Current and Savings Accounts (CASA) as a share of total deposits and total liabilities, over the last 4 quarters.

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