CARE Ratings on Wednesday reaffirmed the CARE AA- (Stable) rating for the Basel III-compliant Tier II bond programme of RBL Bank for Rs 800 crore.
CARE Ratings on Wednesday reaffirmed the CARE AA- (Stable) rating for the Basel III-compliant Tier II bond programme of RBL Bank for Rs 800 crore. The rating agency said the rating remained constrained by high operating cost because of branch and franchise expansion, moderation witnessed in the asset quality, unseasoned loan book given the robust growth in last few years, relatively low proportion of current account savings account (CASA) deposits and reliance on bulk deposits, moderate liquidity profile and geographical concentration.
In the last few months, shares of RBL Bank witnessed an intense selling pressure on rumours and market speculations. However, the management on October 1, 2019 had clarified that bank continues to remain healthy, profitable and its growth journey is intact.
CARE Ratings said the rating assigned to debt instruments of RBL Bank continues to take into account the experienced management and long track record of operations and established franchise, demonstrated capital raising ability which has helped the bank maintain comfortable capital adequacy while growing its advances, adequate profitability and stable scale-up of business.
However, for key rating weakness, the agency said the deposit base is also fairly concentrated on account of higher reliance on bulk deposits, with top 20 depositors accounting for 18.41% of total deposits as on March 31, 2019, although the same has reduced from 19.27% as on March 31, 2018.
The bank’s CASA ratio stood at 25.80% as on June 30, 2019, compared with 24.30% as on March 31, 2018. It increased substantially from 18.60% as on March 31, 2016.
“However, the bank’s CASA proportion was relatively low,” said CARE Ratings in its press release.