Crisil assigns AA/Stable rating to IDFC First Bank's tier II bonds

Crisil has assigned AA/Stable rating to the Rs 2,000 crore tier two bonds under Basel III norms of IDFC First Bank Ltd.

At the same time, the rating on the certificate of deposits programme has been reaffirmed at A1 plus.

"The ratings reflect the bank's healthy capitalisation, increased focus on retailisation of the loan book and expectation of improvement in earnings profile going forward," said Crisil.

These strengths are partially offset by the relatively low, albeit increasing, the proportion of current account and savings account (CASA) deposits in borrowings.

The ability of IDFC First to maintain good asset quality in the growing retail portfolio over a longer period and on a larger scale will be a key monitorable, added Crisil.

 

IDFC First came into being on December 18, 2018, following the merger of IDFC Bank and Capital First. At the time of the merger, IDFC Bank had assets under management of Rs 75,337 crore largely concentrated towards infrastructure and wholesale lending.

On the other hand, Capital First's assets under management of Rs 32,622 crore were primarily retail, focused towards small entrepreneurs and the consumer segment. The merged entity had assets under management of Rs 1.04 lakh crore as on December 31, 2018.

In the initial few quarters post the merger, said Crisil, IDFC First pro-actively recognised and provided for stressed assets as well as invested in expanding its reach for building a strong retail franchise.

Its branches increased to 424 as on December 31, 2019 from 206 a year earlier.