NEW DELHI: Ranking company Crisil On Thursday revised its outlook on long-term debt devices (tier-II bonds, non-convertible debentures, and subordinated debt bonds) of AU Small Finance Financial institution to AA/Steady.
Earlier, tier II bonds had a score of CRISIL AA-/Optimistic that has been upgraded to CRISIL AA/Steady, the lender mentioned in an announcement. Additionally, score on the financial institution’s mounted deposit programme has been upgraded from CRISIL FAA+/Optimistic to AA/Steady.
“The improve of scores stands testomony to the sustenance of the financial institution’s general efficiency and its demonstrated skill to enhance its asset high quality and earnings profile,” AU Small Finance Financial institution mentioned within the assertion.
“The improve of scores by CRISIL is the result of the laborious work put by the AU Financial institution crew to make sure a ramp-up in deposit franchise, robust asset high quality within the post-COVID situation, and hawk-eye strategy on asset high quality. We now have additionally maintained satisfactory capitalisation and wholesome profitability metrics regardless of the challenges. Going ahead, we are going to proceed investing in our digital capabilities and introducing newer merchandise to make sure the supply of high quality providers to our prospects,” mentioned Sanjay Agarwal, Managing Director and CEO, AU Small Finance Financial institution.
The financial institution mentioned the important thing strengths that drove the scores embody, satisfactory capitalisation with the capital adequacy ratio consistently above 15%; a sustained enchancment in its deposit franchise with a three-year CAGR of 39.4%; the financial institution’s skill to maintain enchancment in its retail deposit franchise; and a demonstrated monitor report of sustaining a better-than-average asset high quality by a robust deal with portfolio monitoring and assortment practices and a complete understanding of the working geography and borrower profile.
Enough profitability during the last three to 4 years as a result of excessive yields with lowered price of incremental funding and powerful liquidity with the common Liquidity Protection Ratio (LCR) of 125% towards the regulatory requirement of 100% are the opposite elements that influenced scores.
CARE Ranking, too, lately, upgraded the financial institution’s long-term debt devices (tier-II Bonds) score to CARE AA/Steady which was earlier CARE AA-/Steady. As well as, the company has additionally reaffirmed the score of the financial institution’s short-term devices (certificates of deposits) at A1+.
Supply: Live Mint