CRISIL reaffirms ‘A1+' rating on Federal Bank's instruments worth Rs15,000 crore; stock skids ~3%

26 Sep 2022 , 09:19 AM

Federal Bank Limited informed that CRISIL Ratings Limited has re-affirmed the ‘CRISIL A1+’ rating in respect of its short-term fixed deposits and Certificate of Deposits worth Rs15,000 crore.

The limit of these instruments has been enhanced from Rs12,000 crore.

The bank’s comfortable capitalization, good resource profile, and excellent brand among non-resident Indians are all reflected in the rating (NRIs). These advantages are compensated in part by ordinary, albeit improving, profitability, a small scale of activities, and regional concentration, said CRISIL in its rationale.

Following the inch up observed during the pandemic, asset quality has been slowly increasing. Gross non-performing assets (GNPAs) fell to 2.78% on March 31, 2022, from 3.35% on March 31, 2021, and 2.67% on June 30, 2022.

Lower slippages and greater recoveries aided this, as did the sale of Rs 275 crore to an asset rehabilitation business, which reduced GNPAs by 18 basis points, mentioned CRISIL in its report.

The bank’s strong market position among NRIs, particularly in Kerala, supports the resource profile.

At around 9.21 AM, Federal Bank was trading at Rs113.15 down by 3.08% from its previous closing of Rs116.75 on the BSE. The scrip opened at Rs115.60.

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