ICRA Assigns 'AAA' Rating To Axis Bank Infra Bonds On Strong Capital

ICRA Ratings has assigned a 'AAA' rating with a stable outlook to the infrastructure bonds of Axis Bank Ltd., citing the lender’s strong capital profile and robust internal accruals, the bank said in a filing on Friday.

ICRA noted that while net interest margins are under pressure and credit costs have slightly risen, Axis Bank has managed to maintain profitability by keeping operating expenses in check. The private lender posted a ₹71.18 billion net profit in the Jan-Mar quarter, down just 0.2% on year.

The rating reflects Axis Bank’s stable liability franchise, with a healthy mix of retail term deposits and current and savings account deposits. ICRA said it expects the bank’s profitability to moderate going forward due to a softer rate environment but sees internal accruals as sufficient to meet growth needs.

A downgrade could be triggered if there is a sustained rise in net non-performing assets above 15% of core capital or material weakening in the bank’s deposit base, the agency added.