Icra downgrades rating of IDFC First Bank's bond programme

Domestic rating agency Icra Tuesday said it has downgraded long term rating of IDFC First Bank's bond programme due to weak earnings and on higher provisions due to stressed exposures.

The rating agency downgraded Rs 38,670 crore of non convertible debentures (NCDs) to AA from AA+ with a stable outlook.

"The downgrade considers the bank's weak earnings profile, given the elevated cost-to-income ratio because of the ongoing branch expansion, which has been pressurising the operating profitability, and an increase in credit provisions on account of unanticipated fresh stressed exposures identified by it in Q4 FY19," the agency said in a note.

IDFC Bank got merged with non-banking financial company Capital First to create IDFC First Bank.

The rating agency said despite the strong growth in current account and savings accounts (CASA) deposits, the bank's share in overall liabilities remains low resulting in higher cost of interest-bearing liabilities compared to other banks.

In its ...