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Last Updated : Apr 20, 2020 01:57 PM IST | Source: Moneycontrol.com

ICICI Bank share price dips 3% after S&P revises outlook to negative

S&P expects ICICI Bank to maintain its strong market position and better asset quality (despite a deterioration) than many peers over the next 18 months.

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ICICI Bank share price fell 2.6 percent intraday on April 20 after global rating agency S&P revised the private lender's outlook to negative from stable on the potential impact of the coronavirus outbreak.

"The negative outlook on ICICI Bank reflects our view that the bank is exposed to economic headwinds faced by India's banking system," said S&P Global Ratings in its report dated April 17.

The rating agency believes Indian banks face increasing risks stemming from challenging operating conditions following the coronavirus pandemic.

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S&P expects a flattish U-shape economic recovery. Risks remain on the downside and could lead to few banks being downgraded, it said.

The agency expects Indian banks' asset quality to deteriorate, credit costs to rise, and profitability to decline. Hence it has revised the economic risk trend for the banking system to negative from stable. "Other banking industry scores are not affected," it said.

The rating agency said it would revise its outlook on ICICI Bank to stable if: (1) economic headwinds to India's banking system abate; or (2) the bank demonstrates improved asset quality and performance relative to domestic and international peers.

The agency expects ICICI Bank to maintain its strong market position and better asset quality (despite a deterioration) than many peers' over the next 18 months.

Further, S&P has affirmed the rating on ICICI Bank at BBB- to reflect the bank's strong business franchise, relatively high capitalisation and earnings, stressed asset quality, and sound funding and liquidity profile.

"We note these stressed assets have reduced over the past two years. The rating does not benefit from external support, such as from the government of India," it said.

But "we would lower the rating on ICICI Bank if economic headwinds increase sufficiently for us to lower our assessment of India's Banking Industry Country Risk Assessment. We could also downgrade the bank if its stressed assets rise significantly beyond the system average over the next few quarters," S&P said.

The stock was trading at Rs 371, down Rs 4.95, or 1.32 percent, on the BSE at 1322 hours.

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First Published on Apr 20, 2020 01:57 pm
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