Fitch affirms ING Vysya at 'AA+(ind)'

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Fitch affirms ING Vysya at 'AA+(ind)'

Fitch Ratings has today affirmed ING Vysya Bank's (ING Vysya) ratings at National Long-term 'AA+(ind)' with Stable Outlook, Individual 'D' and Support '3'. Its INR3.9bn subordinated lower tier 2 debt programme is affirmed at National Long-term 'AA+(ind)'.

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Fitch Ratings has today affirmed ING Vysya Bank 's (ING Vysya) ratings at National Long-term 'AA+(ind)' with Stable Outlook, Individual 'D' and Support '3'. Its INR3.9bn subordinated lower tier 2 debt programme is affirmed at National Long-term 'AA+(ind)'.

ING Vysya's National ratings are driven by the expectation of continued support from ING Bank NV (ING, 'AA'/Stable), its single-largest shareholder with a 44% stake. ING exercises management control over ING Vysya and consolidates the bank's financials with the group. ING has previously subscribed to ING Vysya's equity issuances (a rights issue in FY06 and preferential allotment in November 2007) to maintain its stake, and also to the bank's hybrid capital (upper tier 2 debentures) issuance.

While ING Vysya's performance has been improving since FY05, its return on asset (0.7% at FYE08) remains weaker than the system median (1%) due to its higher cost/ income ratio. In line with systemic trends, ING Vysya's gross non-performing loan (NPL) ratio improved to 1.4% at FYE08 (system median: 2%) from 2.6% at FYE07 and 7% at FYE04, as aggressive write-offs and focussed recoveries helped the bank reduce its absolute gross NPLs by more than third of its FY07 level. Although the bank's credit selection and appraisal systems have improved, some deterioration in its asset quality (especially in the rapidly growing consumer finance segment) cannot be ruled out. This is because the domestic credit environment is becoming more challenging as interest rates rise. The bank has raised capital at regular intervals (including equity capital in FY06 and FY08) to maintain its capital adequacy ratios (CAR). Its total CAR at FYE08 was 10.6%, compared to the system median of 12.1%.

ING Vysya was established in 1930 as The Vysya Bank Limited. The bank's branch network of 450 branches is concentrated in south India. Its name was changed to ING Vysya in 2002 after ING acquired a 44% stake in the bank's share capital. 

Sourced From: Fitch Ratings India Pvt Ltd