ICRA issues first rating in Sri Lanka

ICRA Lanka Limited, a wholly subsidiary of ICRA Ltd., an associate of Moody’s Investors Service, has assigned an Issuer Rating of ‘[SL] AAA’ to ICICI Bank Limited (Sri Lanka branch). ‘[SL] AAA’ is the highest-credit-quality rating relative to other domestic issuers. The rating for issuers in Sri Lanka is assigned on an eight-point scale developed specifically for the country, and ranges from ‘[SL] AAA’ to ‘[SL] D’. This rating scale ranks the relative default risk associated with issuers in Sri Lanka. ICRAventuring into Sri Lanka and its increasing footprint beyond the Indian borders underscore the growing international acceptance of an agency that is already a leading provider of credit rating and investment information services in India. Significantly, in addition to the presence in Sri Lanka through a wholly owned subsidiary and in Indonesia through a 99% subsidiary, ICRA has also helped in establishing rating agencies in several other countries, like CRAB in Bangladesh, CRC in Kuwait and BCRA in Bulgaria. The rating assigned to ICICI Bank Sri Lanka branch is ICRA’s first-ever rating in the Sri Lankan market.

The rating factors in strong financial and operational support from the parent ICICI Bank (rated [ICRA] AAA/Stable), comfortable capitalization levels with a large proportion of the assets being deployed into Sovereign Securities/ cash equivalents. The credit strengths are partially offset by small scale of the Sri Lankan operations, modest profitability and high credit concentration in the advances book.

ICICI Bank (Sri Lanka branch) commenced operations in January 2006 with focus on retail lending and remittance business, which was the banks India strategy at that point in time when ICICI Bank had started aggressive retail lending across various product categories. Subsequently, in line with the bank’s global strategy, retail operations have been curtailed CY2008 onwards. Going forward, the strategy is to scale up the corporate book; and secured retail operations.

ICICI Bank Profile

ICICI Bank is the largest private sector bank and the second largest commercial bank in India. For the year ended March 31, 2011, ICICI Bank reported net profits of INR 51.51 billion (1 INR = 2.13 LKR as at Nov 21, 2011) on assets of INR 406 billion and had a regulatory capital adequacy of 19.54% (Tier I:13.17%). For the six months period ended September 30, 2011, ICICI bank reported net profits of INR 28.35 billion on total assets of INR 4407 billion and a regulatory capital adequacy of 18.99 % (Tier1: 13.14%). With a presence in the banking, insurance, asset management, investment banking and private equity sectors, the ICICI Group is an important and large player in the Indian financial system.



ICRA’s Rating Scale for Issuers/Instruments in Sri Lanka

[SL] AAA: The highest-credit-quality rating relative to other domestic issuers

[SL] AA: The high- credit-quality rating relative to other domestic issuers

[SL] A: The adequate-credit-quality rating relative to other domestic issuers

[SL] BBB: The moderate-credit-quality rating relative to other domestic issuers

[SL] BB: The inadequate-credit-quality rating relative to other domestic issuers

[SL] B: The risk-prone-credit-quality rating relative to other domestic issuers

[SL] C: The poor-credit-quality rating relative to other domestic issuers

[SL] D: The lowest-credit-quality rating relative to other domestic issuers

Note: For the rating categories AA through to C, the sign of + [plus] or – [minus] may be appended to the rating symbols to indicate their relative position within the rating categories concerned. Thus, the rating of AA+ is one notch higher than AA, while AA- is one notch lower than AA.
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