Research: Ratings: Moody’s supported ratings of ICICI Bank UK; Stable potential | Techno Glob


London June 24 2022 – Moody’s Investors Service (“Moody’s”) today upgraded ICICI Bank UK PLC’s (“ICICI UK”) long-term deposit ratings from Baa2 to Baa1 and subordinated debt and program ratings from Ba2 to Ba1. (P)Ba1 to (P)Ba2 respectively. At the same time, Moody’s has upgraded the long-term Counterparty Risk Ratings (CRRs) from Baa1 to A3 and the long-term Counterparty Risk Assessment (CR Assessment) from Baa1(cr) to A3 (cr). Moody’s affirmed the senior unsecured debt and program ratings at Baa2 and (P)Baa2 and ICICI UK’s standalone Baseline Credit Assessment (BCA) at ba1. Adjusted BCA upgraded from ba1 to baa3. It also affirmed the bank’s short-term ratings and assessments.

The rating function is owned by ICICI Bank Limited (“ICICI Bank”). parent of ICICI UK; Followed after upgrade from BCA to baa3.

The outlook on long-term deposit and senior unsecured debt ratings remains stable.

A full list of impact ratings can be found at the end of this press release.

Rationale of ratings

long term deposit Upgrading CRRs and CR assessments.

The upgrades include an upgrade of ICICI UK’s Adjusted BCA to baa3 and the result of Moody’s Advanced Loss Given Failure (LGF) analysis, which incorporates the bank’s liability model.

The Baa1 long-term deposit and Baa2 senior unsecured debt ratings reflect Moody’s assumption that there will be a loss-given-default (LGF) on deposits and senior unsecured debt. deposits and senior unsecured debt respectively. Upgrade CRRs to A3; The downgrades from CR assessment to A3(cr) and Ba1 reflect the application of Moody’s Advanced LGF analysis, three notches for the bank’s CRRs and CR assessment, and one result is negative. Notch adjustment for subordinated debt reflecting assumption of high loss-to-default. Although the Adjusted BCA has been upgraded, the affirmation of the senior unsecured debt ratings reflects a relatively high LGF for this debt class given the significant reduction in outstanding debt.

Moody’s assumption of low probability of support from the United Kingdom government (Aa3 Stable) is no further rating upgrade.

Accreditation of BCA and adjusted BCA upgrade

BCA’s approval of ICICI UK’s ba1 reflects asset pressures despite balance sheet de-risking, which has been offset to some extent by the bank’s strong capital levels. ICICI UK has shed large legacies over the last 2 years and reduced risk appetite, but asset pressures are reflected in its problem loan ratio of 4.5% at the end of FY2022. The bank continues to define its business model. India-Europe mainly the United Kingdom; To influence the trade corridor and transition to a balance sheet with more detailed borrowings. The Bank’s lending is geographically diverse, including economic exposures with a weak operating environment. However, the bank has a strong capital base that allows it to absorb significant losses in the event of credit defaults. Additionally, ICICI UK’s strong capital levels and liquidity profile support its medium-term growth targets.

The upgrade of the bank’s Adjusted BCA to baa3 reflects asset quality; It reflects its parent BCA’s recent upgrade, which reflects improvements in capital and profitability. Moody’s deems the possibility of ICICI Bank contributing to ICICI UK very high, leading to a one notch increase in ICICI UK’s Adjusted BCA. The rating agency said the credit worthiness of ICICI UK is based on its common brands; It is noted that it is close to the parents due to the small franchise and high operational linkages.

Factors that may lead to upgrading or downgrading ratings

deposit A deposit due to an increase in the amount of a senior or subordinated debt class; Senior or subordinated debt ratings may be upgraded. ICICI UK’s BCA may also be upgraded if the bank continues to materially improve its exposure to asset risk and profitability while maintaining strong capital levels. A reduction in its reliance on the online deposit fund base, which we view as more price sensitive, is positive for its BCA.

Deposit and debt ratings may be downgraded after the parent’s BCA is downgraded or after the likelihood of ICICI Bank’s support diminishes. ICICI UK’s deposit and senior unsecured debt ratings may also be downgraded due to further reductions in subordination levels or higher levels of tangible banking assets than currently anticipated.

A BCA may be downgraded due to the bank’s weak solvency or pressure on the bank’s liquidity or the stability of its deposit base. However, The downgrade of ICICI UK’s BCA is expected to be offset by the benefit of affiliate support and does not result in a lower adjusted BCA.

List of affected ratings

Issuer: ICICI Bank UK PLC

.. Upgrades:

….long-term benefit ratings; Upgraded from Baa1 to A3.

….The long-term bank deposit ratings have been upgraded from Baa1 to Baa1; The outlook remains stable.

….The adjusted baseline credit assessment has been upgraded from ba1 to baa3.

….The long-term Counterparty Risk Assessment has been upgraded to A3(cr) from Baa1(cr).

….Subordinated Regular Bond/Debenture; Upgraded from Ba1 to Ba2.

….subordinate medium notes program, Upgraded from (P)Ba2 to (P)Ba1.

..Affirmations:

….Senior Unsecured Regular Bond/Debenture, Approved by Baa2; The outlook remains stable.

…. Approved by Senior Unsecured Medium-Term Note Program, (P)Baa2.

….Approved on basic credit assessment ba1.

…. Affirms short-term counter risk rating P-2.

….short-term bank deposits; P-2 is confirmed.

…. Short-Term Counterparty Risk Assessment; Approved P-2(cr)

..Outlook Actions:

….the outlook remains stable.

Main method

The main methodology used in these ratings is the Banks Methodology, published in July 2021 and available at https://ratings.moodys.com/api/rmc-documents/71997. In other words, Please see the Rating Methods page. https://ratings.moodys.com For a copy of this methodology.

Regulatory Disclosures

For further specification of Moody’s key rating assumptions and sensitivity analysis; See the Methodology Assumptions and Sensitivity to Assumptions sections in the disclosure form. See Moody’s Rating Symbols and Definitions. https://ratings.moodys.com/rating-definitions.

program series, This announcement does not apply to ratings issued for any debt type/class or security issued on a later issued bond or the same series; type/class of debt; We provide regulatory disclosures related to each rating of each security or subsequent issued bond. Ratings derived exclusively from current ratings in accordance with Moody’s rating practices. For ratings published by a provider; This announcement provides regulatory statements relating to credit rating action on a provider and each separate credit rating action for guarantors whose credit ratings are derived from the provider’s credit rating. For provisional rating, This announcement provides regulatory statements regarding the provisionally assigned rating. In all cases where the structure and terms of the transaction do not change, it is associated with a specific threshold that can be considered subsequent to the issuance of debt. Before assigning a specific rating in a way that affects the rating. See the issuer/agreement page for the relevant issuer for more information. https://ratings.moodys.com.

For any security or rated entities receiving direct credit support from the primary institution(ies) of this credit rating activity; Any ratings that may change as a result of this credit rating action will be from the relevant regulatory agencies. Exceptions to the following statements apply to jurisdictions: Ancillary Services; disclosure to a rating agency; Disclosure by the rating agency.

The ratings have been disclosed to the rating agency or its designated agent(s) without any modification resulting from such disclosure.

These ratings are requested. Please refer to Moody’s Policy on Setting and Assigning Adverse Credit Ratings available on its website. https://ratings.moodys.com.

The regulatory statements contained in this press release relate to the credit rating and, if applicable, the associated rating outlook or rating review.

Our credit analysis includes environmental, Moody’s general principles for assessing social and governance (ESG) risks can be found here. https://ratings.moodys.com/documents/PBC_1288235.

The global scale credit rating in this credit rating announcement is issued outside the EU by Moody’s Deutschland GmbH, a subsidiary of Moody’s. An der Welle 5, Frankfurt am Main 60322, Germany In accordance with Art.4 Clause 3 of Regulation (EC) No 1060/2009 on credit rating agencies. The EU support status and credit rating are available from the issuing Moody’s office https://ratings.moodys.com.

Please visit https://ratings.moodys.com for updates on changes to the lead rating analyst and rating agency Moody’s.

Please see the issuer/agreement page at https://ratings.moodys.com for additional regulatory statements for each credit rating.

Farooq Khan
Vice President – Senior Analyst
A group of financial institutions
Moody’s Investors Service Ltd.
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Laurie Mayers
Associate Managing Director
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Customer Service: 44 20 7772 5454



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