"Moody's expects asset quality for ICICI Bank's corporate loans will remain under pressure, even beyond the quarter ending March 2016...the bank has significant buffers to withstand a meaningful deterioration in asset quality," the international ratings agency said in a note.
The bank's long-term local and foreign currency bank deposit ratings have been affirmed at Baa3 with a positive outlook.
ICICI Bank has "meaningful exposure" to large corporates, some of whom are showing weak debt servicing abilities, it said, identifying this as a "key source of risk" for the asset quality.
It said the bank's gross non-performing loans ratio increased to 4.21 per cent as of December 2015 from 3.29 per cent in March 2015, and acknowledged that the RBI's one time asset quality review may have resulted in the spike.
The bank had reported a 4.4 per cent decline in its consolidated net profit to Rs 3,122 crore in the third quarter of the fiscal on a three-fold increase in provisions. It had warned of NPA pains in the March quarter as well.
Moody's today said there has been a significant improvement in its core operating profitability over last few years, with its pre-provision income to average assets ratio increasing to 3.18 per cent for FY15 from 1.91 per cent in FY09.
This was possible on a structural improvement in its funding profile, as well as higher net interest margins and better cost-to-income ratios, it said.
Source : Economic Times