Moody’s cuts Indian Overseas BFSR, ups view to stable

Moody's Investors Service said it affirmed Indian Overseas Bank's senior unsecured and local currency deposit ratings at Baa3, reflecting the high likelihood of support that senior creditors can expect to receive from the Government of India (Baa3 stable).

At the same time, however, the agency lowered Indian Overseas’ bank financial strength rating to E+ from D-, which is equivalent to a baseline credit assessment of b2, two notches lower than the previous baseline credit assessment.

The outlook was changed to stable from negative.

Moody’s said the lowering of the standalone baseline credit assessment captures Indian Overseas’ weakening asset quality and capital profile, whereas its decision to maintain the long-term rating at Baa3 reflects the high likelihood of government support for the bank's depositors and senior creditors.

For the quarter ended Sept. 30, Indian Overseas reported an increase in non-performing loans to 7.35% of gross loans from 5.84% in the previous quarter, and an increase in standard restructured loans to 7.85% of gross loans from 7.23% in the previous quarter.

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