ICRA Ups Central Bank Of India Bond Ratings On Improved Solvency, Asset Quality

ICRA Ltd. has upgraded its rating on Central Bank of India's tier-II bonds worth ₹30 billion to 'AA' from 'AA-', and changed the outlook to stable from positive, the public sector lender told exchanges on Monday. This includes both an existing ₹15 billion issuance and a proposed ₹15 billion one.

The rating agency also upgraded the rating on the bank’s tier-I bonds worth ₹10 billion to 'AA-' from 'A+' with a stable outlook. ICRA cited sustained improvements in the bank's solvency, capital position and profitability as key drivers for the upgrade.

ICRA said the bank's asset quality had improved with a fall in fresh non-performing asset generation and reduction in legacy stressed assets. It also noted strengths such as majority sovereign ownership and the government’s past capital support, as well as a high current and savings account deposit base relative to other state-owned banks.

However, the agency flagged that gross NPAs remained elevated relative to core capital. It also warned that growing exposure via co-lending partnerships could pose asset quality risks and said the bank’s underwriting practices will be closely monitored in the near to medium term.