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Capital Intelligence, Oasis Complex, Block E, Gladstone Street,
P.O. Box 53585, CY 3303 Limassol, Cyprus,Telephone: 357 25 342300,
Facsimile: 357 25 817750 E-mail: [email protected]. Web site:
http://www.ciratings.com
24 March 2010
ING VYSYA BANKS FOREIGN CURRENCY AND FINANCIAL
STRENGTH RATINGS UPGRADED BY CAPITAL INTELLIGENCECapital
Intelligence (CI), the international credit rating agency, today
announced that it has raised INGVysya Bank Ltds (IVBL) foreign
currency and financial strength ratings to BB+ from BB with
Stableoutlooks in view of the improvement in key profitability
ratios and the increase in the Banks capitaladequacy. The
short-term foreign currency rating is maintained at B.
The foreign currency ratings are supported by the Banks
ownership and management. The supportrating is maintained at 3
indicating a high likelihood of financial support available from
its controllingshareholder in case of need. INGs commitment to
India extends beyond IVBL to two other financialservices companies
that it partly owns and the Bank remains committed to expanding its
businesses inthe country. While INGs liability is technically
restricted to its equity investment in IVBL, given that thebank is
a global financial conglomerate and that IVBL bears the ING name,
its financial support in caseof need is likely to go beyond its
explicit legal liability. In any case, the Bank is still relatively
small andany support that may need to be provided should be well
within INGs means.
ING Vysya Bank Ltds (IVBL) profitability ratios have improved
steadily over the years reflecting thesuccessful implementation of
the Banks strategies focusing on cost control and the growth of
low-costdeposits as well as fee income. Key performance ratios
strengthened further in the first nine months ofFY2010 (April 2009
through December 2009 as the Banks fiscal year runs from 1 April
through31 March), but remained lower than peer group average. The
Bank has built a large non-interestrevenue base, which is
sustainable, while spreads have widened every quarter resulting in
good netinterest income growth in the first nine months of FY2010.
Funding costs have declined with the growthof low-cost retail
customer deposits. The Bank intends to leverage its existing
banking infrastructure tosubstantially grow its business over the
next few quarters this should help to reduce the cost toincome
ratio to more competitive levels and raise its operating
profitability further.
IVBLs asset quality ratios strengthened substantially in the
fiscal year ended March 2008 due to strongremedial measures and
better overall credit risk management. But key ratios weakened in
FY2009(1 April 2008 through 31 March 2009) and in the first nine
months of FY2010 due to the slowdown in thedomestic economy.
Despite the increase in non-performing loans (NPLs), however, the
NPLs to grossloans ratio remained at a manageably low level at end
December 2009. Importantly, restructured loanswere also low
compared to many of the Banks peers. However, the provision
coverage ratio fell inFY2009 and in the first three quarters of the
current financial year. Tighter provisioning normsintroduced by the
central bank could restrain earnings, but this should strengthen
the provisioncoverage ratio over the next few quarters. The Bank
was well capitalised at end December 2009following a capital
increase in the second quarter of FY2010.
IVBL was established as Vysya Bank in 1930 in the southern
Indian state of Karnataka by members of thelocal trading community.
The ING Group (ING) increased its shareholding to 43.8% in 2002 and
becamethe largest shareholding group. It acquired management
control and changed the name of the Bank toING Vysya Bank Ltd. With
total assets of USD6.2 billion at end March 2009 the Bank is ranked
amongthe smaller Indian banks. The Banks branch and ATM networks
are relatively small in the Indian context(502 branches and other
offices and 357 ATMs at end December 2009). Retail banking,
corporatelending, treasury services and private banking activities
are the principal business drivers.
Contact:Don Kahrs [email protected] Tel: 357 2534
2300Karti Inamdar [email protected] Tel: 91 124
4012142
