Rating agency Fitch has downgraded the rating of ING Vysya Bank to “AA-“ from “AA”. The outlook on its long-term rating is stable.
The revision reflects Fitch’s view that the bank’s rating is now driven by standalone financial performance rather than institutional support, as was the case in the past.
While Fitch continues to factor in a moderate probability of support from its parent, ING Bank, it also recognises that the parent has been reviewing its business portfolio.
The revision in portfolio is for limiting the number of its markets and simplifying the group structure and operations.
The National LT rating is now solely based on ING Vysya’s standalone credit profile, reflected in its individual rating of ‘D’. It takes into account its domestic franchise and sound capitalisation.
The Stable Outlook reflects ING Vysya’s improving financials and growing competitiveness, compared to other banks with ‘D’ individual ratings.
Its profitability ratios have improved steadily over the years. This reflects the successful implementation strategies for controlling costs and growing a low-cost retail deposit base.
The bank’s return on assets improved to 0.84 per cent (annualised) at end-September. It was 0.74 per cent for 2009-10. However, its profitability remained below that of larger private banks.
It was mainly because of a lower net interest margin (NIM) and higher operating costs (cost-to-income ratio of 56.9 per cent at end-September).
