Standard & Poor’s Ratings Services said today it assigned its ‘BBB-‘ long-term and ‘A-3’ short-term counterparty credit ratings to India’s Syndicate Bank. The outlook is stable. At the same time, Standard & Poor’s assigned its ‘C’ bank fundamental strength rating on Syndicate Bank.

“The ratings reflect Syndicate Bank’s average business profile and adequate profitability, and its satisfactory funding and liquidity profile,” said Standard & Poor’s credit analyst Ivy Tan. “A constraining factor is Syndicate Bank’s below average asset quality, contributed mostly from its retail portfolio. With 36.5% of its loans acquired between April 2006 and September 2007, the bank is exposed to the risk of rising nonperforming loans as they become seasoned.” The ratings also reflect our expectation that the government will provide extraordinary support to the bank in a distress situation.

As of Sept. 30, 2007, Syndicate Bank reported bank-only assets of Indian rupee (INR) 934.6 trillion; the bank has a sizeable distribution network of 2,136 domestic branches in 27 States and four Union Territories, and one overseas branch in London. The Indian government currently holds a 66.47% stake in the bank, which may be reduced to 57.63% after the proposed public offer.

“We expect Syndicate Bank will continue to benefit from its majority government ownership and the proposed public offering will proceed as scheduled. Significant weakening of the bank’s financial profile, in particular asset quality and earnings, will place downward pressure on the ratings. Conversely, the ratings could be raised if we perceive that there is an improvement in asset quality and earnings driven by sustainable initiatives,” Ms. Tan added.

Sourced From: CRISIL Limited

Tags: calls, daytrading, free calls, intraday, tips

Similar Posts:

• UBI assigned ‘BBB-‘ rating, ‘C’ BFSR, along with debt rtgs
• Rtgs on HDFC Bk not affected by proposed merger with CBoP
• S&P ups India outlook to stable from negative
• S&P revises India outlook to negative from stable – Markets correct
• ICICI Bank: Fear psychosis comes to rest