It has affirmed the deposit ratings of ICICI Bank
and Axis Bank at ‘Baa3’, and of IDBI Bank at ‘Ba2’.
Moody’s affirmed the BCA and adjusted BCA of ICICI and Axis at ba1. The BCA and adjusted BCA of IDBI has also been affirmed at b2.
On Thursday, Moody’s had said that disruptions to economic activity from the coronavirus outbreak will exacerbate a slowdown in India’s economic growth. Banks’ asset quality will deteriorate across the corporate, small and medium enterprises and retail segments, leading to pressure on profitability and capital.
Funding and liquidity at public sector banks
(PSBs) will be stable because public trust in them will remain strong, thanks to sovereign backing. PSBs will remain unaffected by the YES Bank default.
The growing risk aversion in the system, following default by a private sector bank, will increase funding and liquidity pressure on small private sector lenders. But funding and liquidity at large private sector banks
will be stable, given their well-established franchises and strong depositor base, it said.
A deterioration of global economic conditions and a 21-day lockdown imposed by the central government, in an effort to slow the spread of coronavirus, will weigh on domestic demand and private investment.